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iBRARY  ^ 

.  .;n.<i    REP ORTS 


or  THE 


SPECIAL  COMMITTEE 


IN  RELATION  TO 


GEN.  B.  T.  JOHNSON, 


AS 


ATTORNEY  FOR  THE  STATE  OF  VIRGIISriA, 


AND  HIS 


\mm\  mmw  m  \\i  \m  of  \mi  i  oris. 


EICHMOKD: 

E.  F.  WALKEE,  SUPEEINTENDENT  PUBLIC  FEINTING. 

1877. 


* 


MAJORITY  REPORT. 


♦  The  undersigned,  members  of  the  committee  appointed  under 
,  the  following  preamble  and  resolutions,  to-wit: 

I  "Whereas  communications  which  have  appeared  in  some  of  the 
I  newspapers  published  in  Virginia,  make  it  manifest  that  the  settle- 
;  ments  made  with  the  Chesapeake  and  Ohio  canal  company,  by  Gen- 
'  eral  Bradley  T.  Johnson,  as  attorney  for  the  state  of  Virginia,  and 
;  bis  subsequent  settlements  witb  the  board  of  public  works  of  Vir- 
'  ginia,  are  not  so  understood  as  to  relieve  the  public  mind  from  pain- 
ful anxiety  with  regard  to  said  settlements;  and  whereas  it  is  due 
\  alike  to  the  citizens  of  Virginia  generally,  and  to  those  who  were 
,  immediately  connected  w^ith  said  settlements,  that  these  matters  be 
properly  enquired  into,  and  the  facts  reported  to  this  general  assem- 
I  bly :  therefore, 

1  1.  Kesolved  by  the  House  of  Delegates  of  Virginia,  That  the 
I  board  of  public  works  be  and  are  hereby  instructed  to  furnish  this 
s  House  a  copy  of  all  the  records  pertaining  or  relating  to  the  con- 
tracts entered  into  by  said  board  with  General  Bradley  T.  Johnson 
for  the  enforcement  of  the  liens  and  the  collection  of  the  claims 
held  by  the  state  of  Virginia  against  the  Chesapeake  and  Ohio  canal 
company,  from  January  1st,  1867,  to  February  1st,  1873. 

2.  That  the  Hon.  James  ITeeson  be  and  he  is  hereby  respectfully 
requested  to  furnish  this  House  a  statement  showing  the  amount 
and  character  of  the  claims  against  the  firm  of  Selden,  Withers  and 

'  Company,  which  were  placed  in  his  hands  for  collection,  as  attorney 
for  the  state  of  Virginia;  the  amount  collected  by  him  in  money; 

'the  amount  collected  by  him  in  other  assets;  the  character  of  those 
assets;  and  what  disposition  was  made  of  said  money  and  other 

(assets. 

3.  That  the  auditor  of  public  accounts  be  and  he  is  hereby  in- 

'  structed  to  furnish  this  House  a  statement  showing  the  amount  of 
claims  and  liens  held  by  the  state  of  Virginia  against  the  Chesa- 
peake and  Ohio  canal  company,  which  were  placed  in  the  hands 
of  General  Bradley  T.  Johnson  for  collection;  the  amount  thereof, 

^which  was  paid  into  the  state  treasury;  the  amount  which  was  paid 
into  the  state  treasury  on  account  of  collections  made  of  the  firm 

>i€f  Selden,  Withers  and  Company;  and  the  amount  claimed  by 


I 


4 


and  paid  to  the  said  General  Bradley  T.  Johnson,  therefor,  in  each 
case. 

4.  That  a  committee  of  five  be  appointed,  whose  duty  it  shall  be 
to  carefully  and  thoroughly  examine  all  the  statements  and  exhibits 
which  may  be  furnished  in  response  to  the  foregoing  resolutions, 
and  enquire  into  all  matters  pertaining  thereto,  and  report  the  facts 
to  this  House,  with  such  recommendations  as  they  may  deem  proper. 
Said  committee  shall  have  power  to  send  for  persons  and  papers — 

Respectfully  submft  the  following  report: 

"We  consider  that  w^e  have  a  two-fold  duty  to  perform  under  the 
foregoing.  We  have  endeavored  to  discharge  our  branch  of  it  by 
collecting  all  the  information  within  our  reach,  in  regard  to  the 
transactions  which  form  the  subject  of  the  resolutions,  and  report- 
ing the  same  to  the  House  for  such  action  as  it  may  deem  proper 
in  the  premises. 

In  the  view  entertained  by  the  undersigned,  much  of  this  enquiry 
was  superfluous;  but  regarding  the  language  of  the  resolution  as 
imperative,  we  have  endeavored  to  meet  its  requirements  as  fully  as 
possible. 

In  obedience  to  the  further  requirements  of  the  resolution,  call- 
ing for  such  recommendations  from  the  committee  as  it  may  think 
proper,  we  proceed  to  discharge  the  other  branch  of  our  duty  by 
expressing  the  view  which  we  entertain  of  the  subject,  and  the  con- 
clusions at  which  we  have  necessarily  arrived. 

On  the  26th  day  of  February,  1867,  the  general  assembly  passed 
the  following  resolution: 

Be  it  resolved  by  the  general  assembly  of  Virginia,  That  the 
board  of  public  works  be  and  they  are  hereby  authorized  and 
directed  to  adopt  such  measures  as  in  their  judgment  may  be  neces- 
sary and  proper  to  realize  the  preferred  liens  of  the  state  upon  the 
tolls  and  revenues  of  the  Chesapeake  and  Ohio  canal  companj^i  and 
for  that  purpose  to  contract  with  counsel  for  the  enforcement  of 
said  liens,  in  concert  with  other  holders  of  similar  liens:  provided 
however,  that  the  compensation  of  such  counsel  shall  be  contingent 
only,  and  shall  be  paid  by  said  board  only  out  of  the  proceeds  to] 
be  realized  from  such  proceedings,  or  "^he  debts  and  liens  secured 
thereby. 

It  is  claimed  by  the  mover  of  the  resolution  under  which  we  are 
acting,  as  will  appear  by  reference  to  the  minority  report,  that 
Tinder  the  joint  resolution  just  recited  there  was  no  authority  con- 
ferred upon  the  board  of  public  works  to  contract  with  counsel  to 


5 


do  anything  except  to  collect  moneys  actually  due  to  the  state  of 
Yirginia. 

It  will  appear,  however,  by  reference  to  the  accompanying  evi- 
dence, that  Yirginia  was  not  only  the  creditor  of  the  company  for 
moneys  actually  due,  but  that  she  was  bound  as  guarantor  in  the 
principal  sum  of  $500,000,  upon  bonds  issued  by  the  company,  of 
which  $200,000  were  for  repairs,  the  bonds  for  same  being  known 
as  "repair  bonds,"  while  $300,000  belonged  to  what  were  known 
as  "preferred  bonds,"  part  of  a  loan  of  $1,700,000,  secured  by 
mortgage  dated  June  8th,  1848. 

The  liens  indemnifying  Yirginia  for  her  liability  as  guarantor  on 
these  two  classes  of  bonds,  were  somewhat  diflerent  in  their  nature : 
the  preferred  bonds  being  secured  by  a  mortgage  upon  the  net  tolls 
and  revenue  of  the  company;  while  the  repair  bonds,  issued  later, 
were  by  express  agreement  with  the  company,  to  be  provided  for 
out  of  the  gross  revenues;  that  is  to  say,  they  were  made  a  lien 
prior  to  the  mortgage  securing  the  preferred  bonds. 

It  will  also  appear  from  the  evidence  that  Yirginia  was  a  holder, 
to  a  considerable  extent,  of  the  preferred  bonds,  acquired  by  her  in 
a  settlement  with  the  firm  of  Selden,  "Withers  &  Co. 

It  is  necessary  to  consider  these  facts  in  the  construction  of  the 
joint  resolution  authorizing  the  employment  of  counsel  by  the  board 
of  public  works. 

The  undersigned  do  not  wish  to  be  understood  as  saying  that  the 
question  is  without  difficulty.  The  language  of  the  resolution  is 
somewhat  vague,  and  is  certainly  calculated  to  give  rise  to  differ- 
ence of  opinion  as  to  its  meaning.  After  careful  consideration, 
however,  the  undersigned  have  arrived  at  the  conclusion  that  the 
board  of  public  works  placed  upon  it  a  construction  of  which  it  is 
legally  susceptible. 

In  reaching  this  conclusion,  we  have  been  influenced  by  the  con- 
sideration that  the  legislature  of  Yirginia  would  hardly  have 
undertaken  to  provide  for  the  collection  of  the  comparatively  small 
amount  due  her,  without  at  the  same  time  taking  measures  to 
secure  herself  against  the  loss  to  which  she  was  liable  as  guarantor 
upon  the  company's  bonds,  the  principal  of  which  was  $500,000, 
while  the  interest  upon  it  had  been  in  arrear  for  many  years. 

It  has  also  seemed  to  us  most  probable,  that  if  the  collection  of 
money  had  been  the  sole  purpose  of  the  resolution,  a  simpler  phra- 


6 


seology  would  have  suggested  itself  to  the  legislature,  and  would 
have  been  adopted. 

The  word  lien  ^is  not  synonymous  with  the  word  debt,  as  is 
known  to  every  lawyer.  The  realizing  of  a  lien  is  not  necessarily 
the  collection  of  a  debt;  as,  for  instance,  where  a  surety,  appre- 
hending loss  from  the  default  of  a  principal,  compels  the  creditor 
to  enforce  a  lien  held  by  him  upon  property  of  the  latter.  In  this 
case,  the  suretj^  without  receiving  a  cent,  maybe  said  to  have  real- 
ized a  lien,  which,  though  actually  held  by  another,  nevertheless 
enured  to  his  benefit. 

The  matter  under  consideration  presents  just  a  similar  state  of 
facts,  so  far  as  they  relate  to  Virginia's  liability  for  unpaid  debts, 
principal  and  interest,  of  the  company.  It  is  perfectly  plain  that 
she  held  a  lien  for  her  indemnity  as  guarantor  of  such  debts. 

As  to  interest  paid  by  her  on  such  debts,  she  became  by  su- 
brogation, a  creditor  of  the  company,  holding  whatever  lien  the 
original  creditor  himself  had  held. 

In  addition  to  this,  she  was  the  owner  of  some  of  the  preferred 
bonds,  as  has  been  before  stated;  and  the  lien  executed  by  the  com- 
pany to  secure  these,  was,  of  course,  directly  for  her  benefit  in  com- 
mon with  other  holders  of  such  bonds. 

It  is  claimed  that  the  reference  in  the  joint  resolution  to  "other 
holders  of  similar  liens,"  limits  the  character  of  the  liens  which 
counsel  were  to  be  employed  to  realize,  to  those  debts  which  were 
due  to  Virginia  for  interest  paid,  and  preferred  bonds  held  by  her, 
inasmuch  as  she,  being  the  only  guarantor  upon  the  company's  bonds, 
no  other  person  occupied'  a  similar  position,  and  consequently,  there 
could  be  no  other  holder  of  a    similar  lien." 

We  think  this  view  altogether  too  narrow,  when  taken  with  refer- 
ence to  the  fact  that  as  to  the  preferred  bonds  the  lien  of  Virginia 
as  guarantor,  and  that  of  the  holder  of  those  bonds,  is  created  by  one 
and  the  same  instrument,  while  as  to  the  repair  bonds,  the  rights 
of  all  parties  depend  upon  the  same  agreement  giving  to  them  pri- 
ority over  the  other  debt  of  the  company. 

It  is  diflicult  to  conceive  of  liens  growing  out  of  the  same  acts  or 
instruments  being  anything  but  similar. 

For  these  reasons,  we  have  thought  the  board  of  public  works 
warranted  in  placing  upon  the  joint  resolution  the  construction 
which  appears  from  the  original  and  supplemental  contracts  made 
by  them  with  counsel. 


7 

• 

That  these  contracts  were  made  hy  high  public  functionaries, 
during  the  session  of  the  very  general  assembly  which  passed  the 
resolution  under  whose  authority  they  were  entered  into;  that  they 
were  deposited  among  the  records  of  the  state,  and  were  thus  acces- 
sible by  every  one;  that  a  different  board  of  public  works,  com- 
posed of  equally  high  functionaries,  endorsed  this  construction  of 
their  predecessors  by  making  a  final  settlement  upon  the  basis  of 
the  contracts  entered  into  by  them;  that  a  committee  of  both 
houses,  at  a  subsequent  session  of  the  general  asssembly,  unani- 
mously afiarmed  the  action  of  both  boards;  are  all  circumstances 
which  confirm  us  in  the  impression  that  the  construction  placed 
upon  the  joint  resolution  can  be  sustained  in  law. 

If  this  position  be  correct,  it  follows  naturally,  that  in  the  absence 
of  all  proof  of  fraud  (and  none  is  either  proved  or  charged  in  these 
proceedings),  a  settlement  had  in  accordance  with  the  terms  of  the 
contract,  based  upon  said  resolution  thus  construed,  is  final. 

The  board  of  public  works  being  constituted  by  the  resolution 
the  agent  of  the  state,  with  perfectly  unlimited  discretion,  so  long 
as  they  should  act  within  the  scope  of  their  delegated  powers,  the 
state  retaining  no  power  of  supervision,  dissent,  or  revocation,  have 
contracted  with  counsel,  accepted  the  results  of  their  labors,  and 
paid  them  their  fee.  If  this  be  not  a  completed  transaction,  we  are 
at  a  loss  to  conceive  one. 

So  far  as  mere  calculations  are  concerned,  the  report  of  the 
expert  employed  at  the  request  of  the  committee  agrees  w^ith  the 
statement  exhibited  by  counsel,  and  accepted  by  the  board  of  pub- 
lic works  in  the  final  settlement.  We  presume,  theibre,  that  it  is 
correct. 

In  conclusion,  we  desire  to  say,  that  with  the  diversity  of  opinion 
existing  among  the  committee,  it  would  have  been  impossible  to 
express  any  concurrent  view  as  to  the  wisdom  cfr  policy  of  the  con- 
tracts entered  into,  even  if  it  were  important  that  this  should  be 
considered  at  all.  Regarding  the  whole  matter  as  concluded  by 
the  action  of  parties  having  full  power  in  the  premises,  if  honestly 
exercised,  we  can  conceive  nothing  more  useless  than  a  discussion 
which  can  be  attended  with  no  practical  result. 

"We  think  it  only  just  to  say,  however,  that  nothing  has  appeared 
in  this  investigation  impugning  the  motives  of  any  one  of  the  con- 
tracting parties. 


8 


We  are  agreed,  therefore,  in  view  of  the  considerations  above 
given,  to  recommend  tliat  the  whole  subject  be  dismissed  from  the 
further  consideration  of  the  House. 

JOim  NEELY, 
CH.  A.  EOl^ALD. 


We  have  found  much  difficulty  in  arriving  at  a  satisfactory  con- 
struction^of  the  joint  resolution  of  February  26th,  1867;  but  from 
such  examination  as  we  have  been  able  to  give  the  subject,  prefer 
that  suggested  in  the  above  re]3ort.  Still,  not  confident  of  its  cor- 
rectness, and  being  unw^illing  practically  to  conclude  further  enquiry 
into  the  matter  by  competent  counsel,  with  more  time  and  better 
facilities  for  investigation,  w^e  assent  to  the  recommendation  of  the 
minority  report. 

A.  A,  GRAY, 
GEO.  T.  CLAEKE. 


REPORT 


40f  tlie  Chairman  of  tlie  Special  Committee,  appointed  under  the 
^!  following  resolutions,  made  March  21st,  1877 : 

Whereas  communications  which  have  appeared  in  some  of  the 
'  new^spapers  published  in  Virginia,  make  it  manifest  that  the  settle- 
ments made  with  the  Chesapeake  and  Ohio  canal  company,  by  Gen- 
'  eral  Bradley  T.  Johnson,  as  attorney  for  the  state  of  Virginia,  and 
his  subsequent  settlements  with  the  board  of  public  works  of  Vir- 
"  ginia,  are  not  so  understood  as  to  relieve  the  public  mind  from  pain- 
,  ful  anxiety  with  regard  to  said  settlements;  and  whereas  it  is  due 
alike  to  the  citizens  of  Virginia  generally,  and  to  those  who  were 
immediately  connected  with  said  settlements,  that  these  matters  Tdc 
properly  enquired  into,  and  the  facts  reported  to  this  general  assem- 
bly: therefore, 

1.  Resolved  by  the  House  of  Delegates  of  Virginia,  That  the 
board  of  public  works  be  and  are  hereby  instructed  to  furnish  this 
House  a  copy  of  all  the  records  pertaining  or  relating  to  the  con- 
tracts entered  into  by  said  board  with  General  Bradley  T.  Johnson 
for  the  enforcement  of  the  liens  and  the  collection  of  the  claims 
held  by  the  state  of  Virginia  against  the  Chesapeake  and  Ohio  canal 

■  company,  from  January  1st,  1867,  to  February  1st,  1873. 

2.  That  the  Hon.  James  isTeeson  be  and  he  is  hereby  respectfully 
requested  to  furnish  this  House  a  statement  showing  the  amount 
and  character  of  the  claims  against  the  firm  of  Selden,  Withers  and 

'  Company,  which  were  placed  in  his  hands  for  collection,  as  attorney 
,  for  the  state  of  Virginia;  the  amount  collected  by  him  i^i  money; 
I  the  amount  collected  by  him  in  other  assets;  the  character  of  those 
j:assets;  and  w^hat  disposition  was  made  of  said  money  and  other 
r  assets. 

3.  That  the  auditor  of  public  accounts  be  and  he  is  hereby  in- 
^structed  to  furnish  this  House  a  statement  show^ing  the  amount  of 

claims  and  liens  held  by  the  state  of  Virginia  against  the  Chesa- 
•peake  and  Ohio  canal  company,  w^hich  were  placed  in  the  hands 
of  General  Bradley  T.  Johnson  for  collection;  the  amount  thereof, 
which  was  paid  into  the  state  treasury;  the  amount  w^hich  was  paid 
into  the  state  treasury  on  account  of  collections  made  of  the  firm 
^of  Selden,  Withers  and  Company;  and  the  amount  claimed  by 
and  paid  to  the  said  General  Bradley  T.  Johnson,  therefor,  in  each 
>case. 

2 


10 


4.  That  a  committee  of  five  be  appointed,  whose  duty  it  shall  be 
to  carefully  and  thoroughly  examine  all  the  statements  and  exhibits 
which  may  be  furnished  in  response  to  the  foregoing  resolutions, 
and  enquire  into  all  matters  pertaining  thereto,  and  report  the  facts 
to  this  House,  with  such  recommendations  as  they  may  deem  proper. 
Said  committee  shall  have  power  to  send  for  persons  and  papers. 

The  undersigned  deeply  regrets  that  he  finds  it  necessary  to  dis- 
sent from  the  opinions  and  conclusions  of  a  majority  of  the  special 
committee,  of  which  he  had  the  honor  to  be  chairman,  appointed 
under  the  foregoing  resolutions.  But,  while  he  concedes  to  each 
other  member  of  it  the  full  measure  of  honesty  in  their  purposes 
and  conclusions  which  he  claims  for  himself,  he  is  totally  unable  to 
concur  with  them  in  their  opinions  and  conclusions.  He  has  aimed 
to  give  the  whole  subject  patient,  careful,  and  thorough  investiga- 
tion, and  it  is  due  to  himself,  to  this  general  assembly,  and  to  all 
the  people  of  this  commonwealth,  that  he  not  only  state  the  conclu- 
sions to  which  he  has  been  impelled  by  the  facts  developed,  but 
that  he  also  state  the  main  reasons  which  have  led  to  those  conclu- 
sions. 

Desiring  to  place  all  the  material  facts  before  the  general  assem- 
bly, he  will  aim,  as  briefly  as  a  proper  presentation  of  the  facts 
allow,  to  give  a  general  history  of  the  case. 

The  Chesapeake  and  Ohio  canal  company  was  organized  on  June 
28th,  1828,  for  the  purpose  of  constructing  a  canal  from  George- 
town, D.  C,  to  Cumberland,  in  Maryland.  Prior  to  March  10th, 
1845,  the  state  of  Maryland  had  advanced  large  sums  of  money  to 
the  company  and  taken  a  first  mortgage  on  its  tolls,  revenues,  and 
works,  to  secure  payment  thereof. 

The  caeal  then  lacked  fifty  miles  of  its  completion  to  Cumber- 
land, its  present  western  terminus. 

Maryland  was  not  in  condition  to  make  farther  advances  to  the 
company,  and  knowing  that  its  future  prosperity  depended  upon 
its  completion  of  the  canal  to  the  "coal  fields";  and  knowing,  also, 
that  it  could  not  obtain  money  for  its  completion  and  repaiis  while 
she  held  a  first  mortgage  upon  its  tolls ^  revenues,  and  entire  works  she, 
by  an  act  of  her  general  assembly,  passed  March  10th,  1845,  autho- 
rized the  company  to  issue  bonds  to  an  amount  not  exceeding 
$1,700,000.  These  bonds  were  known  as  ''construction  bonds,"  as 
their  proceeds  were  to  be  applied  solely  to  the  construction  or  comiole- 
tion  of  the  canal  from  "Dam  ISTo.  6"  to  Cumberland. 


11 


The  act  above  referred  to  authorized  the  canal  company  to  secure 
the  payment  of  these  bonds,  and  the  interest  to  accrue  thereon,  by 
a  first  mortgage  upon  its  net  tolls  and  revenues;  and  provided  "that 
the  rights  and  liens  of  this  state  (Maryland)  upon  the  revenues  of 
the  Chesapeake  and  Ohio  canal  company,  shall  be  held  and  con- 
sidered as  waived,  deferred,  and  postponed  in  favor  of  the  bonds 
that  may  be  issued  under  the  aforegoing  sections,  so  as  to  make  the 
said  bonds  and  interest  to  accrue  thereon  preferred  and  absolute 
liens  on  said  revenues,  according  to  the  provisions  of  the  second 
section  of  this  act,  until  said  bonds  and  interest  shall  be  fully  paid." 

The  canal  company,  under  this  authority,  issued  bonds  to  the 
amount  of  $1,699,500,  payable  thirty-five  years  after  date,  with 
coupons  for  the  interest  thereon,  payable  semi-annually,  January 
1st  and  July  1st,  and  executed  a  first  mortgage  upon  its  net  tolls 
and  revenues  to  secure  their  payment. 

On  the  8th  of  March,  1847,  the  general  assembly  of  Virginia 
passed  an  act  to  guarantee  |300,000  of  these  construction  bonds." 
They  were  issued  as  follows:  $18,000  in  1847,  $131,500  in  1848, 
and  $150,500  in  1849.  All  were  payable  35  years  after  the  dates  of 
their  issue. 

By  authority  of  its  charter,  and  also  of  a  proviso  to  the  above  re- 
cited act  of  the  Maryland  general  assembly,  the  company  issued 
bonds  similar  to  those  described  above,  known  as  ^'•repair  bonds," 
to  the  amount  .of  $200,000,  payable  20  years  after  date.  The  pro- 
ceeds of  these  bonds  were  to  be  applied  to  putting  and  keeping  in 
repair  that  portion  of  the  canal  which  had  then  been  built. 

By  an  act  of  her  general  assembly,  passed  March  15th,  1849,  Vir- 
ginia guaranteed  these  $200,000  of  "repair  bonds."  They  had 
priority  of  lien  upon  the  tolls  and  revenues  of  the  company,  both 
by  legal  construction  and  by  express  agreement,  over  all  its  other 
debts  and  liabilities,  including  its  ''•construction  bonds." 

The  company  paid  the  accruing  interest  on  its  "  construction 
bonds"  to  1851,  and  on  its  "repair  bonds"  to  1853.  Between  those 
dates  and  1865,  Virginia  paid  interest  on  these  two  classes  of  bonds 
to  the  amount  of  $305,025,  and  thus  became  a  creditor  of  the  canal 
company  to  that  amount.  She  also  held  other  claims  for  amounts 
due  her  on  other  accounts. 

These  claims,  conceded  hy  the  company,  are  recited  on  page  7  of  the 
"Annual  Report  of  the  President  and  Directors  of  the  Chesapeake- 


12 


and  Ohio  Canal  Company  to  the  Stockholders,  June  3rd,  1867,"  as 
follows,  to  wit : 

There  has  been  paid  by  tlie  state  of  Virginia,  coupons  amount- 
ing to  1269,625,  and  they  also  hold  bonds  heretofore  issued  to  Sel- 
den,  Withers  &  Co.,  for  coupons  paid  by  them,  §140,000,  and  in- 
terest thereon  to  the  first  of  January,  1867,  $126,000;  and  a  certifi- 
cate for  coupons  funded,  $35,400;  with  interest  due  thereon  to  the 
first  of  January,  1867,  $21,731;  total  $592,756.  The  state  also 
claims  interest  on  advances  made  for  pajmient  of  the  coupons  to  the 
first  of  January,  1867,  amounting  to  $140,829  22. 

These  debts  due  to  the  state  of  Virginia,  were  held,  botb  by  the 
state  and  the  canal  company,  to  be  "preferred  liens  upon  the  tolls 
and  revenues  of  the  Chesapeake  and  Ohio  canal  company."  Making 
a  total  of  $738,585  22. 

In  addition  to  the  sums  above  recited,  the  transcript  of  the  record 
furnished  the  committee  shows,  on  page  22nd,  that  Virginia  held, 
and  placed  in  the  hands  ot  the  counsel,  hereinafter  named,  prefer- 
red bonds  of  said  company,  amounting  to  $13,500,  with  $13,365 
interest  due  thereon;  total  $26,865;  making  a  grand  total  of 
$760,450  22. 

The  court  of  appeals  of  Maryland  has  decided  that  the  bonds  as- 
signed to  Virginia  by  Selden,  "Withers  &  Co.,  amounting  to  $140,000, 
and  the  interest  thereon,  and  also  the  interest  due  Virginia  upon 
the  coupons  paid  by  her,  were  only  simple  contract  debts,  and  not 
preferred  liens. 

Prior  to  this  decision,  however,  the  state  of  Virginia  claimed 
that  all  these  debts  were  secured  by  a  first  mortgage  upon  the  tolls 
and  revenues  of  the  canal  company,  and  were,  therefore,  preferred 
liens.  The  canal  company  conceded  the  justice  and  validity  of  this 
claim,  and  had  commenced  their  payment  before  the  aforesaid  deci- 
sion was  made. 

Wishing  to  realize  or  collect  the  debts  due  to  the  state  from  said 
company,  the  general  assembly  of  Virginia  passed,  on  the  26th  of 
February,  1867,  the  following  joint  resolution  : 

Be  it  resolved  by  the  general  assembly  of  Virginia,  That  the 
board  of  public  works  be  and  they  are  hereby  authorized  and  direc- 
ted to  adopt  such  measures  as  in  their  judgment  may  be  necessary 
and  advisable  to  realize  the  preferred  liens  of  the  state  upon  the 
tolls  and  revenues  of  the  Chesapeake  and  Ohio  canal  company; 
and  for  that  purpose  to  contract  with  counsel  for  the  enforcement 
of  said  liens,  in  concert  with  other  holders  of  similar  liens :  provided 


4 


13 


however,  that  the  compensation  of  such  counsel  shall  be  contingent 
only,' and  shall  be  paid  by  said  board  only  out  of  the  proceeds  to 
be  realized  from  such  proceedings,  or  the  debts  and  liens  secured 
thereby. 

The  day  after  the  passage  of  this  resolution,  to  wit:  February 
27,  1867,  the  board  of  public  works  made  the  following  contract 
with  the  parties  therein  named :  " 

Whereas  the  general  assembly  of  Virginia  did,  on  the  twenty-sixth 
day  of  February,  1867,  pass  the  following  joint  resolution : 

Be  it  resolved  by  the  general  assembly.  That  the  board  of  public 
works  be  and  they  are  hereby  authorized  and  directed  to  adopt  such 
measures  as  in  their  judgment  may  be  necessary  and  advisable  to 
realize  the  preferred  liens  of  the  state  upon  the  tolls  and  revenues 
of  the  Chesapeake  and  Ohio  canal  company,  and  for  that,  purpose 
to  contract  with  counsel  for  the  enforcement  of  said  liens  in  concert 
with  other  holders  of  similar  liens:  provided  however,  that  the 
compensation  of  such  counsel  shall  be  contingent  only,  and  shall 
be  paid  by  said  board  only  out  o±  the  proceeds  to  be  realized  from 
proceedings,  or  the  debts  and  liens  secured  thereby; 

And  whereas  the  state  of  Virginia  is  interested  in  the  Chesapeake 
and  Ohio  canal  company  for  five  hundred  thousand  dollars  of  bonds 
issued  by  said  company,  which  bonds  have  been  guaranteed  by  the 
state ; 

And  whereas  said  company  is  utterly  insolvent,  whereby  said 
state  is  really  bound  for  the  full  amount  of  said  bonds,  to  wit:  the 
sum  of  five  hundred  thousand  dollars;  and  the  said  state  is  further 
creditor  of  said  canal  company  in  the  sum  of  two  hundred  and 
ninety-one  thousand  dollars,  for  interest  paid  on  said  bonds,  and 
also  in  the  sum  of  two  hundred  and  eight  thousand  dollars,  due  on 
bonds  held  by  the  state,  with  interest  from  the  first  of  Januarj^, 
1852,  and  also  for  other  sums  due  on  other  bonds  which  have  been 
lost,  stolen  or  mislaid,  on  which  also  interest  is  due; 

And  whereas  it  is  represented  to  this  board,  that  if  the  tolls  and 
revenues  of  said  canal  are  appropriated  to  the  payment  of  these 
debts  due* the  state  of  Virginia  and  other  like  debts  due  other  per- 
sons of  like  dignity,  that  said  revenues  and  tolls  will  be  sufficient 
to  infuse  large  value  into  interests  which  are  now  totally  unpro- 
ductive, and  will  relieve  the  state  from  her  aforesaid  liability  as 
guarantor,  by  providing  for  the  payment  of  the  interest  on  said 
bonds  so  guaranteed  as  aforesaid. 

Therefore,  the  board  of  public  works  of  the  state  of  Virginia,  in 
pursuance  of  the  authority  given  by  the  hereinbefore  recited  joint 
resolution  of  the  general  assembly,  do  hereby  agree  and  contract 
with  Bradley  T.  Johnson,  of  the  city  of  Richmond,  and  IsTeilson 
Poe  and  John  P.  Poe,  of  the  city  of  Baltimore,  of  the  second  part, 
that  they,  the  parties  of  the  second  part,  shall  undertake  to  secure 
the  aforesaid  debts  and  interests  of  said  state  in  said  canal  company, 


• 


14 


l)y  securing  possession  of  the  canal  and  appropriating  its  tolls  and 
revenues  to  the  payment  of  the  said  debts  and  liabilities,  and  other 
debts  and  liabilities  due  by  the  canal  company  to  other  parties  as 
well  as  to  said  state;  and  to  secure  this  end  the  said  board  of  pub- 
lic works  do  hereby  constitute  and  appoint  the  said  parties  of  the 
second  part  the  attorneys  of  the  said  state,  for  her  and  in  her  name 
to  take  all  such  proceedings  as  may  be  necessary  at  law  or  in  equity, 
before  any  court,  anywhere,  or  before  the  general  assembly  of  Mary- 
land, to  secure  said  interests  and  debts  of  said  state,  by  procuring 
possession  of  the  tolls  and  revenues  of  said  canal,  and  appropriating 
them  to  the  payment  of  the  said  debts  due  said  state,  and  liabilities 
for  which  she  is  security  as  aforesaid,  and  the  like  debts  due  by  the 
canal  to  other  creditors. 

And  it  is  expressly  understood  and  agreed  between  the  parties  to 
these  presents,  that  the  said  parties  of  the  second  part  shall  bear 
all  the  expenses  and  costs  of  any  proceeding  which  they  shall  insti- 
tute and  carry  on,  and  that  they  shall  indemnify  the  state  of  Vir- 
ginia from  all  costs  and  charges  whatsoever  incurred  by  them  in 
the  prosecution  of  any  proceeding  commenced  in  the  name  of  the 
state,  either  separately  or  in  connection  with  other  creditors. 

And  it  is  further  understood  and  agreed,  that  whenever  the  said 
canal  or  its  tolls  and  revenues  are  delivered  over  into  the  possession 
of  the  preferred  creditors  thereof,  and  of  which  the  state  is  one,  as 
hereinbefore  set  forth,  then  and  in  that  case  the  parties  of  the  sec- 
ond part  are  to  be  considered  as  having  performed  their  obligations 
under  this  contract  and  agreement,  and  to  have  secured  the  said 
debts,  liabilties,  and  liens  of  said  state  on  said  canal.  And  the  said 
board  of  public  works  of  the  state  of  Virginia,  by  and  in  pursu- 
ance of  the  authority  vested  in  them  by  the  hereinbefore  set  forth 
joint  resolution,  do  hereby  covenant  and  agree  to  pay  and  assign  in 
bonds  or  coupons  of  said  canal  company,  to  the  parties  of  the  second 
part,  as  soon  as  said  canal  or  its  tolls  and  revenues  are  delivered  or 
appropriated  to  the  preferred  creditors  thereof,  such  per  centum  of 
the  debts  due,  liabilities  guaranteed,  and  claims  against  said  canal 
held  or  guanteed  by  said  state,  as  shall  be  determined  by  a  general 
meeting  of  the  preferred  creditors  of  said  canal  company  to  be  just, 
proper  and  sufficient  compensation  for  like  services. 

Richmond,  February,  27,  1867. 

F.  II.  PEIRPOIXT, 

Governor  Virginia, 
President  Board  of  Public  Works. 

"WM.  F.  TAYLOR, 

Auditor  Public  Accounts. 

BRADLEY  T.  JOHNSOX. 
JSTEILSOX  POE. 
JOW  P.  POE. 

By  order  of  the  board  of  public  works. 


15 


In  testimony  whereof  we  have  hereunto  set  the  seal  of  said  board 
and  affixed  our  names,  this  day  and  year  aforesaid. 
[Seal]  J.  M.  HERNDOiT, 

Secretary  of  Commomvealth^ 
And  ex- officio  Clerk  Board  of  Public  Works, 

Six  days  after  the  execution  of  the  foregoing  contract,  the  follow- 
ing supplemental  contract  was  made: 

Whereas,  on  the  twenty-sixth  day  of  February,  1867,  the  board  of 
public  wor%  of  Virginia  agreed  with  Bradley  T.  Johnson,  ISTeilson 
Poe  and  John  P.  Poe,  that  they  should  procure  the  Chesapeake  and 
Ohio  canal  or  its  tolls  and  revenues  to  be  delivered  over  to  the  pre- 
ferred creditors  thereof,  or  trustees  for  their  benefit,  and  as  soon  as 
said  work  was  done,  then  to  pay  said  parties  such  compensation  as 
might  be  agreed  on  by  a  general  meeting  of  preferred  creditors  as 
£t  and  proper  compensation  in  such  cases,  all  proceedings  to  be  at 
the  expense  of  the  parties  of  the  second  part;  and  whereas  all  par- 
ties consider  it  better  to  have  the  compensation  fixed  and  agreed 
upon  at  once,  without  waiting  for  the  general  meeting:  therefore 
it,  this  fifth  day  of  March,  1867,  is  agreed  between  said  board  and 
said  Johnson,  Poe  and  Poe,  that  the  rate  of  compensation  shall  be 
twenty  per  cent,  of  the  debts  due  to,  liabilities  guaranteed,  and 
money  paid  by  the  state  of  Virginia  to,  for  and  in  behalf  of  the 
Chesapeake  and  Ohio  canal  company,  which  rate  shall  be  in  lieu  of 
that  referred  to  in  original  agreement,  and  which  amount  shall  be 
paid  the  parties  of  the  second  part  in  bonds,  coupons  or  other  in- 
debtedness of  the  canal  company  in  the  hands  of  and  belonging  to 
the  state,  as  soon  as  said  canal  or  its  tolls  and  revenues  is  delivered 
or  appropriated  to  the  preferred  creditors  thereof,  or  trustees  for 
them. 

Witness  our  hands  and  the  seal  of  said  board. 

F.  H.  PEIPPOIOT, 

Governor  of  Virginia. 
WM.  F.  TAYLOR, 

Auditor  of  Public  Accounts, 
jm.  S.  CALVERT, 

Treasurer  of  Virginia. 

By  order  of  the  board  of  public  works  of  the  commonwealth  of 
Virginia,  I  have  hereunto  set  the  seal  of  the  said  board  this  5th  day 
of  March,  A.  D.  1867. 

[Seal]  J.  M.  HERNDON, 

Secretary  of  Commomveatth, 
And  Clerk  of  the  Board  of  Public  Works. 

Witness  our  han  :1s  and  seals  this  day  aforesaid. 

BRADLEY  T.  JOHXSO^T,  [Seal.] 
NEILSOE'  POE,  [Seal.] 
JOHN  P.  POE,  [Seal.] 


The  remarkably  loose  and  unsatisfactory  manner  in  which  the 
records  of  the  board  of  public  works  were  kept  from  the  time  when 
the  foregoing  contracts  were  made,  to  the  final  settlement  between 
the  parties  thereto,  was  such,  that  it  is  exceedingly  difficult,  if  not 
impossible,  to  ascertain  from  them,  with  any  degree  of  certainty, 
the  precise  amount  or  character  of  the  claims  of  the  state  which 
were  placed  in  the  hands  of  the  counsel  for  collection.  The  record 
contains  no  summary  of  such  claims.  Kor  does  it  contain  any  reg- 
ular account  with  counsel ;  nor  any  condensed  statergent  of  their 
transactions.  The  reports  and  settlements  of  counsel  are  but  little, 
if  any,  better.  If  their  object  had  been  to  so  obscure,  mystify  and 
perplex  their  transactions  as  to  render  a  full  and  satisfactory  under- 
standing of  them  exceedingly  difficult,  if  not  impossible,  they  could 
scarcely  have  accomplished  that  object  more  successfully.  Their 
reports  are  numerous  and  lengthy,  but  not  one  of  them  contains  a 
succinct  statement  of  the  claims  in  their  hands,  or  their  collections- 
upon  those  claims.  It  is  only  by  wading  through  the  whole  mass 
of.  matter,  and  thoroughly  studying  every  part  of  it,  that  the  facts 
can  be  educed.  While,  however,  these  records,  when  taken  alone, 
fail  to  show  what  claims  were  placed  in  the  hands  of  counsel,  they, 
in  connection  with  the  published  "Reports  of  the  President  and 
Directors  of  the  Canal  Company,"  and  of  the  "Maryland  Reports,'* 
do  show  that,  omitting  the  Selden  and  "Withers'  bonds  for  §140,000 
and  the  interest  thereon,  and  also  all  claims  for  interest  on  the  cou- 
pons held  by  Virginia,  the  following  claims,  which  were  acknowl- 
edged by  the  canal  company,  and  decided  by  the  ^laryland  court  of 
appeals  to  be  "preferred  liens,"  were  in  their  hands,  and  collected 
by  them,  to- wit: 

Certificate  for  coupons  funded,  -  -     35,400  00 

Coupons  paid  and  held  by  the  state,        -  -    269,625  00 

Preferred  bonds  of  the  company,  -  -     13,500  00 

Coupons  for  accrued  interest  thereon,      -  -     13,365  00 

Aggregating  the  sum  of  -  -    331,890  00 

The  whole  amount  paid  into  the  state  treasuc^y  on  ac- 
count of  these  claims,  v>^as  -  -  -     82,347  10 

Leaving  a  balance  in  the  hands  of  counsel,  of      -       §249,542  90 


Assuming  that  the  above  sum  of  §331,890  was  all  that  was  col- 
lected by  the  counsel,  they  w^ere  entitled  to  §66,378,  their  compen- 


* 

17 


sation  being  20  per  cent,  of  their  collections.  This  sum,  taken  from 
$249,542  90,  leaves  $183,164  90  still  due. 

This  statement  is  not  claimed  to  be  absolutely  correct ;  but  it  is 
as  near  an  approximation  to  it  as  the  ambiguous  character  of  the 
'  records  aifords. 

The  contract  of  February  27th,  1867,  provided  that  the  compen- 
isation  of  counsel  should  be  "such  per  centum  of  the  debts  due,  lia- 
dbilities  guaranteed,  and  claims  against  said  canal  held  or  guaran- 
teed by  said  state,  as  shall  be  determined  by  a  general  meeting  of 
4he  preferred  creditors  of  said  canal  compan}^  to  be  just,  proper 
,and  sufficient  compensation  for  like  services."  The  supplemental 
contract,  made  si^  days  thereafter,  says:  "The  rate  of  compeusa- 
'tion  shall  be  twenty  per  cent,  of  the  debts  due  to,  liabilities  guar- 
anteed, and  money  paid  by  the  state  of  Virginia  to,  for,  and  in  be- 
half of  the  Cheseapeake  and  Ohio  canal  company." 
'    By  what  authority  was  such  a  contract  made? 

The  authority  of  the  board  of  public  works  to  contract  with 
bounsel  for  the  enforcement  of  the  liens  of  Virginia  upon  the  tolls 
and  revenues  of  the  Chesapeake  and  Ohio  canal  company,  is  to  be 
found  in  the  joint  resolution  passed  by  the  general  assembly  on  the 
26th  of  February,  1867.  That  resolution  is  recited  in  the  contract 
as  the  authority  for  making  it.  The  board  had  no  authority  to  make 
a  contract  for  such  purpose  before  the  passage  of  that  resolution. 

Our  first  business,  therefore,  is  to  enquire  into  the  scope  and 
meaning  of  the  joint  resolution,  and  ascertain  what  powers  it  con- 
ferred upon  the  board.    The  resolution  is  as  follows: 

Be  it  resolved  by  the  general  assembly  of  Virginia,  That  the 
joard  of  public  works  be,  and  they  are  hereby  authorized  and 
(lirected  to  adopt  such  measures  as  in  their  judgment  may  be  neces- 
sary and  advisable  to  realize  the  preferred  liens  of  the  state  upon 
,;he  tolls  and  revenues  of  the  Chesapeake  and  Ohio  canal  company; 
uid  for  that  purpose,  to  contract  with  counsel  for  the  enforcement 
|)f  said  liens,  in  concert  with  other  holders  of  similar  liens:  pro- 
dded however,  that  the  compensation  of  such  counsel  shall  be  con- 
lingent  only,  and  shall  be  paid  by  said  board  only  out  of  the  pro- 
ceeds to  be  realized  from  such  proceedings,  or  the  debts  and  liens 
ecured  thereby. 

i  What  did  the  general  assembly  mean  by  "the  preferred  liens  of 
he  state?"    It  doubtless  meant  such  liens  as  it  terms  similar  liens 
*n  the  hands  of  other  holders.    The  correct  answer  to  this  question 
\  3 


18 


may,  tlierefore,  be  obtained  hy  ascertaining  what  kind  of  Wens  tliese 
'^similar  liens, in  the  hands  of other  holders/'  were.  What  ^'pre- 
ferred liens"  were  held  both  by  Virginia,  and  by  other  parties 
also?    Held  by  them  in  common? 

The  canal  company  had,  as  already  stated,  issued  "construction 
bonds"  to  the  amount  of  ^1,699,500,  and  "repair  bonds"  to  the 
amount  of  |200,000.  These  were  all  coupon  bonds,  with  coupons, 
payable  semi-annually,  for  the  interest  thereon.  The  payment  of 
both  the  bonds  and  the  coupons  thereon,  as  they  should  respect- 
ively become  due,  was  secured  by  a  first  mortgage  upon  the  net 
tolls  and  revenues  of  the  canal  company.  Each  of  these  bonds  and 
coupons  w^as,  therefore,  a  preferred  lien  upon  thog^  tolls  and  reve- 
nues. All  parties,  therefore,  whether  individuals  or  states,  who 
held  any  of  these  bonds  or  coupons,  were  holders  of  '^preferred 
liens.''  Where  two  or  more  parties  held  them,  they  were  holders 
of  "  sbnilar  liens,"  or  the  same  kind  of  liens,  and  might  act  in  con- 
cert for  their  enforcement.  Virginia  held  some  of  these  liens,  and 
various  persons  held  others;  hence,  the  state  and  thesQ  persons  were 
"holders  of  similar  liens."  How  any  of  these  holders  of  either  the 
bonds  or  coupons  became  possessed  of  them,  is  a  question  which 
does  not  arise,  and  is  wliolly  foreign  to  the  point  under  considera- 
tion. The  question  we  are  now  seeking  to  solve  is,  what  did  the 
resolution  mean  by  preferred  liens?  The  preferred  liens  of  the  state 
were,  indisputably,  such  liens  as  she  held  in  common  with  "  other 
holders  of  similar  liens."  This  precludes  the  idea  that  the  joint 
resolution  had  any  reference  to  the  release  of  Virginia  from  her 
guaranty  of  the  bonds  of  the  company. 

Virginia  was  the  ojily  guarantor  of  the  bonds  of  the  canal  com- 
pany. In  this  respect  there  was  no  one  who  sustained  a  similar  re- 
lation to  either  the  company  or  its  creditors.  If,  therefore,  her  guar- 
anty can  be  regarded  a  "preferred  lien"  in  contemplation  of  law, 
it  was  not  such  a  lien  as  Mie  board  was  authorized  to  contract  with 
counsel  to  realize  or  enforce  "in  concert  with  other  holders  of  simi- 
lar liens." 

Again:  As  the  "board"  was  "to  contract  with  counsel  for  the 
enforcement  of  said  liens  in  concert  with  other  holders  of  similar 
liens,"  the  question  arises,  what  liens  other  holders  held  which 
could  be  enforced  in  1867?  There  could  be  no  foreclosure  of  their 
mortgage  until  there  was  default  on  the  part  of  the  company.  The 
company  was  not  in  default  on  its  bonds.    ISTeither  its  repair  nor 


19 


construction  bonds  were  due.  Its  only  default  was  in  its  failure  to 
pay  the  coupons  for  interest  on  its  bonds.  The  only  preferred  liens 
which  were  in  the  hands  of  other  holders  which  could  then  be  en- 
forced, therefore,  were  the  past-due  coupons. 

Virginia,  by  the  payment  of  $305,000  of  these  coupons,  had  been 
subrogated  to  the  rights  of  their  original  holders.  Such  subroga- 
tion gave  her,  however,  no  right  which  the  original  holder  did  not 
possess.  Her  lien  was  similar  to  that  of  other  holders  of  past-due 
coupons,  and  they  might  act  in  concert  for  their  enforcement;  not 
because  of  her  guaranty,  but  by  reason  of  her  ownership  of  fast-due 
coupons. 

A  sentence  in  the  contract  of  February  27th,  1867,  strengthens 
this  position.  It  says:  These. debts  due  the  state  of  Virginia,  and 
other  like  debts  due  other  persons  of  like  dignity."  '^Like  dignity,''^ 
cannot,  in  this  case,  be  applicable  to  the  holders  of  these  like 
debts'^ — that  is,  to  the  state  of  Virginia  dinU  individual  creditors,  h^at 
to  the  debts  themselves.  They  were  like  debts,'^  of  "  like  dignitg,''  due 
to  the  state  and  to  persons.  Such  terms  could  not  be  applied  to 
Virginia's  guaranty  of  the  bonds  of  the  canal  company. 

Again:  Counsel  was  to  "be  paid  by  said  board  out  of  the 
proceeds  to  be  realized  from  such  proceedings,  or  the  debts  and 
liens  secured  thereby.  Virginia's  release  from  her  guaranty  was  no 
recover!^  from  the  canal  company  of  anything,  but  simply  a  release 
from  her  obligation  to  the  creditors  of  that  company,  who  held  the 
bonds  which  Virginia  had  guaranteed.  Her  right  of  recovery  did 
not  arise  from  her  guaranty,  but  from  her  oionership  of  bonds  and 
coupons  of  the  company,  which  she  held  in  common  with  "  other 
holders  of  similar  liens." 

In  what  sense  could  counsel,  who  were  to  "be  paid  only  out  of  the 
proceeds  to  be  realized  from  such  proceedings,"  that  is,  to  be  paid 
in  kind,  receive  20  per  cent,  of  Virginia's  release  from  her  obligation 
to  the  creditors  of  the  canal  company? 

The  joint  resolution  under  which  the  board  was  acting  settled 
the  question,  beyond  a  doubt,  that  counsel  were  to  be  paid  in  kind. 
Hence,  if  they  receive  money  of  the  canal  company,  they  were  enti- 
tled to  be  paid  in  money.  If  they  received  bonds  or  other  evidences 
of  debt  for  the  state,  they  were  to  be  paid  in  the  same.  If  they  re- 
<3eived  a  release  from  the  creditors  of  the  canal  company,  a  thing 
w^hich  was  not  in  the  contemplation  of  the  resolution,  they  have  no 


20 


right  to  claim  either  the  bonds  or  money  of  the  state  as  their  por- 
tion of  such  release. 

■  The  joint  resolution  does  not  contain  one  word  about,  or  allusion 
to  Virginia's  guaranty,  or  an  intimation  of  a  desire  to  employ  coun- 
sel to  release  her  from  it.  l^o  such  meaning  appears  upon  its  face. 
If  it  be  in  the  resolution  at  all,  it  is  there  covertly ;  and  as  the  reso- 
lution was  drawn  by  the  counsel  themselves,  as  is  shown  by  their  oion 
testimony,  the  rule  of  law  which  requires  that  contracts  shall  be  con- 
strued most  strongly  against  the  state,  does  not"  apply  in  this  case; 
but  the  rule  that  no  man  shall  gain  by  his  own  ivrong,  should  be  ap- 
plied to  it,  and  the  hidden  meaning,  if  it  has  any,  be  discarded. 

The  message  of  Governor  Walker,  of  March  8,  1870,  who  was 
ex-officio  president  of  the  board,  shows  that  he  did  not  contemplate 
the  absorption  of  Virginia's  claims  against  the  canal  company  by 
counsel  upon  such  a  construction.  He  says,  page  13,  when  enu- 
merating the  available  assets  of  the  state: 

The  claim  of  the  state  against  the  Chesapeake  and  Ohio  canal 
company,  being  for  interest  paid  on  account  of  the  bonds  of  that 
company  guaranteed  by  the  state,  is  in  process  of  settlement;  and 
the  agents  of  the  state  who  have  the  matter  in  charge  are  confident 
that  the  state  will  soon  realize  therefrom,  less  expenses,  nearly  or 
quite  the  sum  of  $600,000. 

Realizing  "  the  preferred  liens  of  the  state  ujDon  the  tolls  and 
revenues  of  the  Chesapeake  and  Ohio  canal  company,"  evident!}^ 
means,  so  enforcing  the  legal  remedies  which  the  state,  in  common 
with  "other  holders  of  similar  liens,"  or  holders  of  "other  like 
debts  of  like  dignity"  had,  as  to  recover  from  the  company  the 
amounts  due  her  on  account  of  bonds  and  coupons  which  she  held 
against  it,  just  as  other  holders  of  similar  liens  obtain  payment  of 
the  sums  due  them. 

The  conclusion  reached  upon  this  point,  after  the  'most  patient, 
careful,  and  thorough  consideration  of  the  whole  subject,  is,  that  the 
joint  resolution  authorized  the  board  of  ]3ublic  works  to  contract 
with  counsel  to  enforce  the  remedies  which  Virginia  had,  in  com- 
mon with  all  other  holders  of  similar  liens,  for  the  recovery  of  the 
respective  sums  due  to  the  state,  and  to  all  others  who  joined  in  the 
movement,  on  account  of  bonds  and  coupons  held  b}^  them  upon 
the  canal  company;  and  that  it  gave  the  board  no  authority  to  con- 
tract with  counsel  for  any  other  purpose  whatever. 


21 


The  idea,  advanced  by  the  counsel,  that  this  course  is  obnoxious 
to  the  charge  of  selfishness  or  narrow-mindedness,  is  contradicted 
by  the  facts  themselves.  If  Virginia  had  only  sought  to  recover 
what  the  canal  company  owed  her,  and  to  procure  release,  from  her 
obligation  to*  the  bondholders  as  guarantor  of  those  bonds,  the 
charge  of  selfishness  and  narrow-mindedness  might  well  be  made 
against  her;  but  when  she  makes  it  the  duty  of  the  board  of  public 
works  ^'to  contract  with  counsel  for  the  enforcement  of  {her) 
liens  in  concert  with  other  holders  of  similar  liens,"  and  leaves  her- 
self still  hound  by  her  guaranty,  except  so  far  as  she  becomes  released 
from  it  by  the  payment  of  the  coupons  and  bonds  guaranteed  by 
her  as  they  become  due,  such  a  charge  recoils  upon  those  who 
make  it,  and  completely  refutes  their  proposition. 

The  contract  of  February  27th,  1867,  is  based,  in  part,  upon  the 
assumption  that  "the  said  company  is  utterly  insolvent."  And  the 
printed  brief  or  statement  of  the  counsel  says,  on  page  10  :  "  From 
the  year  of  its  completion,  1851,  to  1869,  it  never  earned  enough  to 
pay  off  its  floating  debt,  much  less  provide  for  any  of  the  interest 
on  preferred  or  mortgaged  bonds;" 

Are  these  statements  sustained  by  facts  ? 

The  39th  annual  report  of  the  president  and  directors  of  the 
canal  company,  made  June  3,1867,  says,  on  page  4 :  "Excess  of 
revenue  over  current  expenses,  $132,590  49."  Yet  during  that 
year  the  extrtior dinar y  work  done  by  the  company  amounted  to 
$40,006  25.  Its  total  expenses  were  $234,256  37,  and  its  earnings, 
$366,846  86. 

On  page  6  of  the  same  report,  the  following  statement  occurs : 

The  annual  report  of  June,  1865,  gave  a  detailed  statement  of 
the  outstanding  current  or  floating  debts  of  the  company  payable 
from  their  available  surplus  revenues,  amounting  to  $301,024  25. 
During  the  past  two  years  these  obligations  have  been  paid,  with 
the  exception  of  about  $10,000,  due  for  the  greater  part  for  out- 
standing certificates  for  repairs  and  small  balances  on  superinten- 
dencies,  to  parties  who  have  not  presented  them  for  payment;  these 
can  be  paid  when  demanded,  and  for  all  practical  fiscal  purposes, 
the  floating  debt  of  the  company  may  be  regarded  as  extinguished. 
The  future  surplus,  revenues,  after  the  proper  maintenance  and 
improvements  required  to  keep  the  canal  in  good  condition,  will 
be  applicable  to  the  payment  of  the  interest  due  on  the  bonds  of 
the  company. 


22 


Again,  on  page  8,  the  same  report,  after  speaking  of  the  pros- 
pects and  plans  of  the  company,  says : 

It  is  confidently  anticipated  that  the  coupons  of  interest  on  the 
bonds  of  the  company  issued  for  the  completion  and  repair  of  the 
canal,  becoming  due  on  the  1st  of  July  and  1st  of  Jaiiuary  ensuing^, 
can  be  paid  at  maturity. 

That  is,  if  past-due  interest  should  be  funded,  the  company  would 
be  able  to  pay  interest  from  that  time  as  it  accrued. 

On  the  22d  of  August,  1867,  Bradley  T.  Johnson  &  Co.  reported 
to  the  board  a  collection  of  $22,302,  and  received  for  their  services 
in  collecting  it  the  sum  of  |4,460  40,  that  being  twenty  per  cent, 
of  the  amount  collected.  The  order  of  the  board  on  that  occasion 
is  as  follows  : 

THURSDAY,  August  22,  1867. 

An  account  of  Bradley  T.  Johnson  &  Co.,  amounting  to  $4,460  40, 
being  twenty  per  cent,  on  |22,302,  realized  from  the  tolls  and  reve- 
nues of  the  Chesapeake  and  Ohio  canal  company,  and  paid  into  the 
treasury,  and  applied  to  the  liens  of  the  state  on  said  tolls  and  reve- 
nues, as  per  contract  between  said  Johnson  &  Co.  with  the  board  of 
public  works  of  Virginia,  authorized  by  joint  resolution  of  the 
general  assembly  passed  February,  1867,  w^as  submitted  and  con- 
sidered. Whereupon,  it  was  ordered  that  the  said  account  be  cer- 
tified to  the  auditor  of  public  accounts,  as  correct,  for  paj^ment. 

The  management  of  the  canal  company  may  have^been  improvi- 
dent and  injudicious;  but  wdth  these  facts  before  us,  it  is  taxing  our 
credulity  too  severely  to  ask  us  to  believe  that  it  was  utterly  in-' 
solvent,^'  and  that  from  "1851  to  .  1869  it  never  earned  enough  to 
pay  ofiT  its  floating  debt,"  when  the  compani/  shows  it  had  paid  ofiP 
its  floating  debt  before  the  board  contracted  with  counsel;  and 
when  that  very  coimsd,  who  makes  the  statement,  had  received 
$4,460  40  for  collections  made  by  him  on  account  of  interest  due 
the  state,  in  less  than  six  months  after  his  contract  with  the  board 
had  been  made,  and  about  two  years  and  a  half  before  the  time 
when  he  says  it  had  not  paid  ofi:*  its  floating  debt,  much  less  provide 
for  any  of  the  interest  on  preferred  or  mortgaged  bonds. 

Another  paragraph  in  the  contract  of  February  27,  1867,  must 
be  noticed.    Immediately  after  declaring  the  canal  company  to  be 

utterly  insolveyit,''  and  enumerating  some  of  the  debts  and  liabilities, 
the  contract  says: 


23 


And  whereas  it  is  represented  to  this  board,  that  if  the  tolls  and 
revenues  of  said  canal  company  are  appropriated  to  the  payment  of 
these  debts  due  the  state  of  Virginia,  and  other  like  debts  due 
other  persons  of  like  dignity,  that  said  revenues  and  tolls  will  bo 
sufficient  to  infuse  large  value  into  interests  which  arc  now  totally 
unproductive;  and  will  relieve  the  state  from  ber  aforesaid  liability 
as  guarantor,  by  providing  for  the  payment  of  the  interest  on  said 
bonds  so  guaranteed  as  aforesaid. 

Can  tbere  be  anything  more  superlatively  absurd  than  the  state- 
ment, that  large  value''  can  be  infused  into  ^'totally  unproductive'' 
interests  by  appropriating  the  net  ''tolls  and  revenues"  of  an 
'bitterly  insolvent"  company  to  the  payment  of  its  debts? 

With  what  propriety  could  the  canal  company  be  said  to  be  "w^ 
terly  insolvent"  if  the  appropriation  of  its  net  earnings  to  the  pay- 
ment of  its  debts  would  relieve  it  and  its  securities  from  all  lia- 
bility ? 

Again :  The  board  was  not  only  unauthorized  to  contract  with  coun- 
sel to  procure  the  release  of  Virginia  from  her  liability  as  guarantor 
of  the  bonds  of  the  canal  company,  but  no  reason  or  necessity  exis- 
ted for  their  doing  so.  If  the  counsel  employed  "to  realize  the 
preferred  liens  of  the  state  upon  the  tolls  and  revenues  of  the  com- 
pany" took  proper  steps  "for  the  enforcement  of  said  liens  in  con- 
cert with  other  holders  of  similar-  liens,"  as  they  were  required  to 
do  by  the  joint  resolution,  these  steps  would  secure  the  payment  of 
the  debts  due  by  the  canal  company,  both  to  Virginia  and  all  her 
other  preferred  creditors,  and  the  state's  release  from  all  liability  as 
guarantor  would  follow  as  the  legitimate  and  necessary  consequence 
of  such  proceedings.  The  moment  the  debts  of  the  company  were 
paid  all  liability  for  those  debts,  on  the  part  of  both  the  company 
and  the  state,  ceased.  The  same  proceedings  which  secured  the  one^ 
necessarily  secured  the  other ;  and  until  those  debts  i(?erepaid,  the  state 
was  no  more  released  from  her  liability  to  the  holders  of  the  bonds 
she  had  guaranteed  than  the  coinjoany  was.  The  proceedings  which 
would  secure  the  payment  of  the  debts  due  to  Virginia  would  ne- 
cessarily secure  the  payment  of  the. debts  due  to  ''other  holders  of 
similar  liens."  Hence  the  propriety  of  their  acting  in  ''concert." 
When  the  board  of  public  works  contracted  with  Bradley  T.  John- 
son, Neilson  Poe,  and  John  P.  Poe  to  pay  them  "twenty  per  cent, 
of  the  debts  due  to,  liabilities  guaranteed,  and  money  paid  by  the 
state  of  Virginia  to,  for,  and  in  behalf  of  the  Chesapeake  and  Ohio 


24 


canal  company,"  they  contracted  to  pay  them,  and  did  afterwards 
pay  them,  out  of  the  assets  of  the  state,  not  only  twenty  per  cent, 
of  all  debts  due  to  the  state  from  the  canal  company  which  they 
should  realize  or  collect,  but  twenty  per  cent,  also  upon  the  whole 
amount  of  both  principal  and  interest  due  to  other  creditors  of  that 
company  who  held  its  guaranteed  bonds  or  coupons  for  the  inter- 
est thereon.  This  was  not  only  unwarranted  by  the  joint  resolu- 
tion, but  was  a  fraud  upon  the  state. 

The  repair  bonds  of  the  company  were  all,  with  all  the  interest 
due  thereon  which  had  not  been  paid  by  Virginia,  paid  by  the  com- 
j)ani/  before  Virginia  realized  or  collected  one  dollar  of  the  money 
she  had  paid  on  account  of  said  interest;  so  that  the  payment  to 
counsel  of  twenty  per  cent,  thereon  by  Virginia  was  virtually  giving 
to  said  counsel  the  sum  of  $63,100,  because  said  company  had  paid 
to  its  other  creditors  the  sum  of  $315,500. 

Another  remarkable  feature  of  the  contracts  between  tho  board 
and  counsel  is,  that  they  not  only  construe  the  words  *'to  realize  the 
^preferred  liens  of  the  state  upon  the  tolls  and  revenues  of  the  Chesa- 
peake and  Ohio  canal  company"  to  mean  "to  procure  the  release 
of  Virginia  from  her  obligation  to  the  creditors  of  the  canal  com- 
pany who  hold  its  guaranteed  bonds,"  but  they  determine  in  ad- 
vance that  that  which  would  not  be  a  release  in  law,  and  which  is  no 
release  in  fact,  shall  be  construed  to  be  such  by  this  contract.  The 
contract  says : 

And  it  is  farther  understood  and  agreed,  that  whenever  the  said 
canal  or  its  tolls  and  revenues  are  delivered  over  into  the  posses- 
sion of  the  preferred  creditors  thereof,  and  of  which  the  state  is 
one,  as  hereinbefore  set  forth,  then  in  that  case  the  parties  of  the 
second  part  are  to  be  considered  as  having  performed  their  obliga- 
tions under  this  contract  and  agreement,  and  to  have  secured  the 
said  debts,  liabilities  and  liens  of  said  state  on  said  canal. 

This  would  seem  broad  and  latitudinous  enough  to  cover  every 
purpose  of  the  contracting  parties.  Yet  even  with  this  most  re- 
markable and  unprecented  decision  to  regard  a  fictitious  release  of 
the  state  from  her  obligations  to  the  creditors  of  the  canal  company 
a  realization  of  the  '^preferred  liens  of  the  state  upon  the  tolls  and 
revenues"  of  that  company,  the  counsel  have  still  failed  to  comply 
with  their  contract.    Its  language  is : 

Whenever  the  said  canal  or  its  tolls  and  revenues  are  delivered 
over  into  the  possession  of  the  preferred  creditors  thereof,  and  of 
which  Virginia  is  one,  as -hereinbefore  set  forth. 


25 


>  How  is  it  hereinbefore  set  forth  f  Here  it  is:  "The  parties  of 
the  second  part  (the  counsel)  shall  undertake  to  secure  the  aforesaid 
debts  and  interest  of  said  state  in  said  canal  company  by  securing 
possession  of  the  canal  and  appropriating  its  tolls  and  revenues  to  the 
,  payment  of  the  said  debts  and  liabilities  and  other  debts  and  lia- 
bilities due  by  the  canal  company  to  other  parties  as  well  as  to  said 
state."  (!N"ot  italicized  in  contract.)  Neither  Virginia  nor  the 
counsel  has  ever  secured  even  an  imciginarif  possession  of  the  Chesa- 
peake and  Ohio  canal,  and  it  is  to  this  day  as  absolutely  in  the  pos- 
session and  under  the  control  of  the  canal  company  as  it  was  when 
this  contract  was  made. 

The  settlement  made  between  the  board  and  the  counsel  on  Jan- 
uary 3d,  1873,  and  the  testimony  taken  since  that  time,  develop 
facts,  which,  if  characterized  as  they  deserve  to  be,  would  require 
the  use  of  harsher  terms  than  would  be  proper  to  use  in  this 
.report.    The  facts  will  speak  for  themselves. 

On  January  3d,  1873,  the  board  and  counsel  assumed  that  the 
state  had  been  released,  according  to  the  terms  of.their  contract, 
from  her  liability  as  guarantor  of  the  construction  bonds  of  the 
canal  company.  The  principal  of  these  bonds  amounted  to  the  sum 
of  $300,000,  and  the  interest  on  them  from  July,  1852,  to  July, 
1872,  to  the  sum  of  $369,000.  Of  this  interest  the  sum  of  $28,674 
had  been  paid;  leaving  a  balance  of  $340,326  still  due  on  interest. 
To  these  sums  they  added  a  debt  due  to  Virginia  from  the  canal 
company,  remounting  to  $26,865,  making  a  total  of  $667,191.  Upon- 
the  unfounded  pretension  that  Virginia  had  been  released  from  her 
obligation  as  guarantor  of  those  bonds,  the  counsel  claimed,  and 
the  board  allowed  and  paid  them  $133,438,  that  being  twenty  per 
cent,  upon  the  above-stated  sum  of  $667,191.  It  was  claimed,  as 
has  been  stated,  that  Virginia,  having  guaranteed  the  bonds  of  the 
canal  company,  was  liable  to  the  creditors  of  the  canal  company 
for  the  payment  of  those  bonds  and  the  interest  thereon,  and  that 
she  had  been  released  from  her  liahility.  Hence  counsel  was  paid 
twenty  per  cent,  on  the  whole  amount  as  compensation  for  their  ser- 
vices in  procuring  this  release.  N"ow  let  us  see  how  far  Virginia 
has  been  released  from  her  liability  as  guarantor  of  those  bonds  ? 
I^one  of  those  bonds  are  yet  due ;  $18,000  of  them  will  become 
due  in  the  year  1882,  $131,500  in  1883,  and  $150,500  in  1884. 
Those  bonds,  with  Virginia's  guaranty  upon  them,  are  still  held  by 
4 


26 


the  creditors  of  the  canal  companj^,  and  not  one  of  ihem  has  eve 
intimated  his  purpose  to  release  her  from  such  guarantj^ 

What  had  the  canal  company  done,  up  to  January,  1873,  whicl 
could  have  been  construed  as  either  a  formal,  a  virtu{?l,  or  evei 
imaginary  release?  They  had  not,  of  course,  paid  any  of  the  bonds 
They  had  from  nine  to  twelve  years  to  run  before  they  would  be 
come  due.  Neither  had  they  then,  nor  have  they  yet  paid  the 
iyiterest  due  upon  those  bonds. 

Hamilton  G.  Fant,  a  broker  of  Washington  city,  and  one  of  the 
counsel's  own  witnesses,  testified  that  the  company  is  in  default  ii 
the  payment  of  interest  on  its  preferred  bonds  from  July,  1864,  to 
the  present  time;  and  that  its  bonds  have  depreciated  since  1873 
How  much  they  had  depreciated,  he  did  not  know. 

E.  H.  Maury,  Esq.,  a  broker  of  Richmond  city,  testified  that 
these  bonds  had  recently  sold  as  low  as  from  70  to  75  cents  in  the 
dollar;  and,  remember,  they  have  past-due  coupons  on  them  for 
thirteen  years'  interest.  These  facts  prove,  beyond  a  doubt,  that 
Virginia's  liability  as  guarantor  of  these  bonds  is  just  as  great  noin 
both  in  law  and  in  fact,  as  it  was  the  day  they  were  issued.  Yet 
the  counsel,  after  having  been  allowed  to  retain  $63,100  of  the 
funds  of  the  state,  upon  the  pretense  of  having  released  the  state 
from  her  liability  as  guarantor  of  the  ''repair  bonds"  of  the  canal 
company,  when,  in  fact,  every  dollar  of  those  bonds  was  paid  by 
the  company  before  the  interest  paid  on  them  by  Virginia  could  be 
refunded  to  her,  were,  in  1873,  allowed  to  retain  $93,224  more  of 
the  state's  funds  upon  a  fictitious  release  of  her  liability  as  guarantor 
of  her  "construction  bonds."  It  is  not  surprising  that,  with  suck 
guardians,  Virginia's  treasury  should  be  empty. 

It  is  argued  that  even  if  the  joint  resolution  did  not  authorize  the 
board  of  public  works  to  contract  with  counsel  to  procure  the 
release  of  Virginia  from  her  liability  as  guarantor,  said  counsel 
ought,  nevertheless,  to  be  paid  twenty  per  cent,  on  the  amount,, 
principal  and  interest,  which  the  state  had  guaranteed,  because  it 
was  by  their  labors  and  services  that  the  state  was  released  from 
her  obligation  to  pay  these  bonds  and  the  interest  thereon.  There 
are  several  weighty  objections  to  this  proposition  :  In  the  first  place, 
Maryland  held  a  second  mortgage  upon  the  tolls  and  revenues  of  the- 
canal  company  for  about  $10,000,000,  none  of  which  could  be  col- 
lected so  long  as  the  "  preferred  bonds "  of  the  company  were 
unpaid.    She  was,  therefore,  more  deeply  interested  in  its  pros- 


I 

27 

ejiperity  than  any  and  all  of  its  other  creditors,  and  the  change  in  the 

management  of  the  canal  was  very  largely  due  to  this  fact.  That 
;|change  could  not  have  been  made  without  the  active  agency  of 
iHiMaryland;  and  that  agency  v^ns  prompted  by  her  own  interest, 
'^i  In  the  next  place,  the  other  creditors  of  the  company  were  as 
J^deepl}^,  and,  when  combined,  more  largely  interested  than  Virginia. 
UThe  creditors  of  the  company  were  not  those  only  who  held  the 

bonds  guaranteed  by  Virginia.  Virginia  had  only  guaranteed 
eii$300,000  of  the  $1,699,500  of  construction  bonds  which  had  been 

issued.  So  there  were  $1,399,500  of  those  bonds  which  were  not 
(^  guaranteed,  and  which  the  holders  of  would  feel  more  anxiety  about 
.  ifrom  that  fact,  and,  consequently,  would  be  more  active  in  their 
,  efforts  to  collect  interest  on  them  as  it  became  due,  and  to  place  the 
i;  company  in  a  condition  to  pay  the  bonds  as  should  become 
5:  due;  so  that  these  creditors  are  to  be  credited  with  a  large  amount 
^  of  the  influence  which  improved  the  management  of  the  canal . 
I  In  the  third  place,  the  improved  condition  of  the  finances  of  the 
,!  company  was  largely  due  to  the  revival  of  business  after  the  war^ 
)  which  had  been  greatly  crippled  during  the  war.  The  close  of  the 
t  war  found  the  company  not  only  with  an  empty  treasury,  but  with 
;  a  floating  debt  of  $301,024  25.  *rhe  revival  of  business  enabled  it 

to  pay  off"  this  debt  in  the  years  1865  and  1866,  before  the  contracts 
'  of  February  27th  and  March  5th,  1867,  were  made;  and  it  is  fair 
f  to  presume  that  the  counsel  had  knowledge  of  this  fiict  before 
■  they  contracted  with  the  board  of  public  works.    It  was  made  pub- 

lie  by  the  canal  company,  and  said  counsel  claimed  to  be  familiar 
\^  with  the  affairs  of  the  company.    Said  company  not  only  paid  off 

this  large  floating  debt  in  1865  and  1866,  but  published  its  readi- 
^  ness  to  resume  the  payment  of  interest  on  its  joreferred  bonds,  and 

did  commence  payment  thereon.  Virginia  received  the  sum  of 
'  $22,302  on  the  22d  of  August,  1867,  on  account  of  her  claims 

against  the  company,  and  paid  ^'Bradley  T.  Johnson  &  Co.'' 
^  $4,460  40  for  collecting  it.  This  sum  was  collected  by  said  counsel 
t  in  about  five  months  after  they  had  been  contracted  with,  and  before 

aivj  change  had  taken  place  in  the  management  of  the  company, 

and  was  due  solely  to  the  revival  of  business  on  the  canal. 
^     When  the  canal  company  commenced  these  payments  a  dispute 

arose  as  to  the  proper  distribution  of  its  surplus  revenues,  and  it 
,  was  enjoined  from  making  further  payments  until  the  points  in  dis- 
'  pute  should  be  settled  by  the  courts.    The  canal  company  always 


1 

28 

<3onceded  the  justice  and  correctness  of  Virginia's  claims  to  a  muc 
larger  amount  than  was  .allowed  by  the  courts;  and.  but  for  the']^^ 
intervention,  she  would  have  received  a  much  larger  amount  tha  ^{^i 
she  did:  provided  the  counsel  had  not  retained  it  all  as  compensatio\\^^ 
for  their  services.  ,i2 
^ourthl3^  But  conceding,  as  is  fully  and  heartily  done,  that  th'  ^\ 
counsel  displayed  and  exercised  great  skill,  zeal,  energy,  and  per 
severance  in  the  management  of  the  business  they  had  undertaken 
except  as  to  the  payment  into  the  treasury  the  proper  sums  due 
the  state  on  account  of  collections  made  by  them  for  her;  and  con-jj 
ceding,  also,  that  the  labors  of  said  counsel  were  highly  valuable, 
and  contributed  materially  to  improvement  in  the  management  of 
the  canal  company,  and,  consequently,  to  the  promotion  of  the 
interests  of  all  the  creditors  of  that  company,  the  sixty-six  thousand 
dollars  to  which  they  were  legitimately  entitled,  that  being  twenty 
per  cent,  of  their  actual  collections,  was  not  only  ample,  but  liberal 
compensation  for  all  the  services  they  rendered.    The  final  decree 
in  the  case  of  The  Commonwealth  of  Virginia  vs.  Chesapeake  and 
Ohio  Canal  Company  was  rendered  by  the  Maryland  court  of 
appeals  at  its  October  term  in  1871 — less  than  five  years  after  the 
contracts  of  1867  were  made.    A!l  the  legal  costs  of  the  proceed- 
ings, in  both  the  lower  and  higher  courts,  were  paid,  by  order  of 
court,  out  of  the  funds  of  the  canal  company.    If  the  other  expenses 
of  counsel  amounted  to  $10,000,  which  is  not  reasonable  to  suppose, 
there  was  still  left  to  them  the  net  sum  of  $12,000  per  annum  for 
the  whole  time  these  proceedings  were  pending,  while  it  is  reasonable 
to  suppose  that  not  more  than  one-fourth  of  their  time  was  devoted 
to  them.    They  had  already  received  large  sums  upon  their  collec- 
tions, and  had  done  nothing  that  they  thought  unnecessary  to  en- 
able them  to  make  those  collections.    Hence,  the  retaining  by  the 
counsel,  with  the  concurrence  of  the  board,  on  the  6th  of  August, 
1871,  of  sixty-three  thousand  and  one  hundred  dollars  of  the  money 
which  said  counsel  had  collected  from  the  canal  company  for  the 
state,  in  addition  to  20  per  cent,  allowed  them  on  their  actual  collec- 
tions, and  not  as  commissions  on  such  collections,  but  as  compensa- 
tion for  services  which  said  counsel  claimed  to  have  rendered  in 
releasing  the  state  from  her  liabihty  as  guarantor  of  the  "repair 
bonds"  of  sAid  company;  and  the  further  sum  of  ninety-three  thou- 
sand two  hundred  and  twenty-four  dollars,  on  January  3d,  1873,  not, 
as  above  stated,  as  commissions  on  their  collections,  but  in  addition 


f 

! 

29 

^^hereto,  as  compensation  for  services  they  claimed  to  have  renderert 
'^[1  releasing  the  state  from  her  liability  as  guarantor  of  the  ''con- 
struction bonds''  of  said  company,  when,  in  fact,  there  had  not 
%en,  nor  has  there  yet  been  any  such  release,  was  neither  autho- 
"ized  by  laio  nor  supported  by  equity ;  and  those  sums,  with  legal 
hterest  thereon  from  those  dates,  are  still  due  the  state,  and  their 
;i)ayment  ought  to  be  legally  enforced. 

^  Wishing  to  understand  all  the  facts  connected  with  the  matters 
''mder  investigation,  and  to  do  perfect  justice  to  all  parties  inter- 
'isted  in  them,  without  partiality  or  prejudice  to  any,  the  committee 
riflbrded  the  counsel  the  amplest  opportunity  to  explain  and  vindi- 
3ate  their  views  and  actions.  Said  counsel  appeared  and  discussed 
:he  subject  fully,  both  in  person  and  by  other  counsel,  both  orally 
knd  by  written  arguments;  introduced  such  wisnesses  as  they  de- 
dred,  and  were  allowed  to  write  out  the  various  questions  they 
ivished  them  respectively  to  answer,  place  them  in  the  hands  of  said 
witnesses  to  take  away  with  them,  and  write  out  their  answers  apart 
From  any  of  the  committee,  and  to  file  the  deposition  of  one  of  the 
counsel  (General  Johnson),  prepared  in  the  same  way,  without  any 
cross-examination.  It  is  deemed  useless  to  comment,  in  this  re- 
port, upon  the  testimony,  as  it  will  all  be  printed- 

Finding  the  records  of  the  board  of  public  works  with  reference 
to  these  transactions,  and  the  settlements  between  the  board  and 
counsel  shrouded  in  obscurity  and  uncertainty,  the  committee  asj^ed 
and  obtained  leave  to  employ  an  accountant  to  state  the  account  of 
said  counsel,  both  upon  their  own  theory  and  upon  the  theory  of 
this  report.  They  obtained  the  services  of  Robert  M.  Browm,  Esq., 
Df  Amherst,  a  lawyer  and  commissioner  of  skill  and  experience, 
who  performed  the  duty  assigned  him  assiduously  and  faithfully. 
His  report  will  form  a  part  of  the  record  of  the  committee's  pro- 
ceedings. . 

After  carefully  weighing  the  foregoing  facts  and  the  evidence  in 
the  record,  I  am  impelled  to  the  conclusion  that  the  retention  by 
Bradley  T.  Johnson,  Keilson  Poe  and  John  P.  Poe,  attorneys  for 
the  state,  of  $63,100,  on  the  22d  day  of  August,  1871,  and  of 
$93,224,  on  the  3d  of  January,  1873,  of  moneys  collected  by  them 
prior  to  those  dates,  on  account  of  claims  due  the  state  from  the 
Chesapeake  and  Ohio  canal  company,  and  the  consent  of  the  board 
of  public  works  thereto,  were  without  authority  of  law  and  in  vio- 
lation of  their  obligations  to  the  commonwealth. 


30 


A  sufficient  apology  tor  the  length  of  this  report  maybe  found  in 
the  importance  of  the  subject,  and  the  fact  that  most  of  the  infor- 
mation the  general  assembly  or  the  people  of  Virginia  have  here- 
tofore had  upon  it  has  been  from  the  parties  interested  or  their 
agents.  This  being  the  first  time  the  facts  have  ever  been  brought 
to  the  attention  of  the  general  assembly  or  the  people  of  Virginia, 
it  has  .been  deemed  proper  to  state  them  at  length. 

One  of  the  contracting  parties  stated  before  the  committee  that 
the  attorney-general  concurred  in  his  construction  of  the  joint  re- 
solution under  which  the  contract  was  made.  It  is,  therefore, 
deemed  proper  that  other  able  counsel  be  consulted  before  any  legal 
proceedings  in  the  case  are  imperatively  ordered;  and  as  the  reso- 
lution under  which  the  committee  was  appointed  requires  them  to 
^'report  the  facts  to  this  House,  with  such  recommendation  as  they 
may  deem  proper,"  I  now  respectfully  recommend  the  adoption  of 
the  following  joint  resolution: 

Be  it  resolved  by  the  general  assembly  of  Virginia,  That  liis 
excellency  the  governor  of  Virginia  be,  and  he  is  hereby  autho- 
rized and  instructed  to  employ  able  counsel  to  examine  into  all 
matters  pertaining  to  the  contracts  made  by  the  board  of  public 
works  with  Bradley  T.  Johnson,  Neilson  Poe  and  John  P.  Poe,  on 
February  27th  and  March  5th,  1867,  and  their  settlements  under 
said  contracts;  and  if,  in  their  opinion,  there  are  proper  grounds 
for  sp  doing,  the  said  governor  shall  cause  legal  proceedings  to  be 
instituted  by  the  attorney-general,  in  connection  with  such  other 
able  counsel,  to  recover  whatever  balances  may  be  due  the  state  on 
account  of  collections.made  on  her  behalf  by  her  attorneys,  Bradley 
T.  Johnson,  [N'eilson  Poe  and  John  P.  Poe,  from  the  Chesapeake 
and  Ohio  canal  company. 

All  of  which  is  respectfully  submitted. 

JOHN  E.  MASSEY. 


I  am  of  opinion  that  the  fiicts  in  this  case,  as  stated  by  the  chair- 
man, are  correctly  set  forth,  and  I  concur  in  his  construction  of  the 
resolution  of  the  general  assembly  of  February  26,  1867,  and  in 
the  resolution  recommended  by  him  for  adoption  by  the  general 
assemblv. 

WM.  F.  GORDOX. 


PROCEEDINGS  OF  THE  COMMITTEE. 


SATURDAY,  Febkuary  24th,  1877. 

The  special  committee  appointed  under  the  following  resolutions  : 

Ij  Whereas  communications  which  have  appeared  in  some  of  the 
'newspapers  published  in  Virginia,  make  it  manifest  that  the  settle- 
,  rnents  made  with  the  Chesapeake  and  Ohio  canal  company,  by  Gen- 
eral Bradley  T.  Johnson,  as  attorney  for  the  state  of  Virginia,  and 
his  subsequent  settlements  with  the  board  of  public  works  of  Vir- 
ginia, are  not  so  understood  as  to  relieve  the  public  mind  from  pain- 
ful anxiety  with  regard  to  said  settlements;  and  whereas  it  is  due 
alike  to  the  citizens  of  Virginia  generally,  and  to  those  who  were 
immediately  connected  with  said,  settlements,  that  these  matters  be 
properly  enquired  into,  and  the  facts  reported  to  this  general  assem- 
bly: therefore, 

1.  Resolved  by  the  House  of  Delegates  of  Virginia,  That  the 
board  of  public  works  be  and  are  hereby  instructed  to  furnish  this 
House  a  copy  of  all  the  records  pertaining  or  relating  to  the  con- 
tracts entered  into  by  said  board  with  General  Bradley  T.  Johnson 
for  the  enforcement  of  the  liens  and  the  collection  of  the  claims 
held  by  the  state  of  Virginia  against  the  Chesapeake  and  Ohio  canal 
company,  from  January  1st,  1867,  to  February  1st,  1873. 

2.  That  the  Hon.  James  Neeson  be  and  he  is  hereby  respectfully 
requested  to  furnish  this  House  a  statement  showing  the  amount 
and  character  of  the  claims  against  the  firm  of  Selden,  Withers  and 
Company,  w^hich  were  placed  in  his  hands  for  collection,  as  attorney 
for  the  state  of  Virginia;  the  amount  collected  by  him  in  money; 
the  amount  collected  by  him  in  other  assets;  the  character  of  those 
assets;  and  what  disposition  was  made  of  said  money  and  other 
.assets. 

3.  That  the  auditor  of  public  accounts  be  and  he  is  hereby  in- 
structed to  furnish  this  House  a  statement  showing  the  amount  of 
claims  and.  liens  held  by  the  state  of  Virginia  against  the  Chesa- 
peake and  Ohio  canal  company,  w^iich  were  placed  in  the  hands 
of  General  Bradley  T.  Johnson  for  collection;  the  amount  thereof, 
which  was  paid  into  the  state  treasury;  the  amount  which  was  paid 
into  the  state  treasury  on  account  of  collections  made  of  the  firm 


32 


of  Selden,  Withers  and  Company;  and  the  amount  claimed  by 
and  paid  to  the  said  General  Bradley  T.  Johnson,  therefor,  in  each 
case. 

4.  That  a  committee  of  five  be  appointed,  whose  duty  it  shall  be 
to  carefully  and  thoroughly  examine  all  the  statements  and  exhibits 
which  may  be  furnished  in  response  to  the  foregoing  resolutions, 
and  enquire  into  all  matters  pertaining  thereto,  and  report  the  facts 
to  this  House,  with  such  recommendations  as  they  may  deem  proper. 
Said  committee  shall  have  power  to  send  for  persons  and  papers — 

Consisting  of  Messrs.  Massey,  ll^eely.  Carter  of  Loudoun,  Ronald, 
and  Gordon,  met  upon  the  call  of  the  chairman. 

Present — Messrs.  Massey,  i^eely,  Ronald  and  Gordon;  and  Gen. 
Bradley  T.  Johnson,  witH  William  L.  Royall,  his  counsel. 

The  resolution  under  which  the  board  of  public  works  made  the 
contracts  with  Messrs.  Johnson,  Foe  and  Poe,  and  the  contracts 
made  under  the  same,  together  with  their  reports,  and  other  re- 
cords and  papers  connected  therewith,  were  read  and  discussed  by 
the  committee  and  counsel  for  General  Johnson. 

Pending  which,  General  Johnson  expressing  his  intention  to 
introduce  witnesses  upon  the  subject  under  investigation,  and  de- 
siring time  to  procure  their  attendance,  and  the  chairman  being 
requested  to  set  forth  all  the  points  upon  which  the  investigations 
were  to  be  made,  in  order  that  the  same  might  be  prepared  in  full 
and  the  attendance  of  the  witnesses  procured,  the  committee  arose 
to  meet  again  on  the  call  of  their  chairman. 


THURSDAY,  March  1st,  1877. 

The  committee  as  enlarged  by  the  appointment  of  Messrs.  Clarke 
of  Surry,  and  Gray,  under  the  following  resolution  agreed  to  by 
the  House  of  Delegates : 

Resolved,  That  the  committee  of  five  appointed  to  investigate 
matters  pertaining  to  settlements  of  the  claims  of  Yirginia  against 
the  Chesapeake  and  Ohio  canal  company  be  increased  to  seven — 

Met  pursuant  to  the  call  of  the  chairman. 

Present — Messrs.  Massey,  Ronald,  and  Gordon. 

Not  a  quorum  of  the  committee  being  present,  the  committee 
arose  to  meet  again  Friday  evening,  at  4  o'clock  P.  M. 


33 


FRIDAY,  March  2d,  1877. 
The  committee  met  pursuant  to  order. 

Present — Messrs.  Massev,  ^sTeely,  G-ordon,  Clarke,  Ronald,  and 
Gray. 

The  subject-matter  of  investigation  was  discussed  by  Mr.  J.  P. 
Poe,  of  Baltimore ;  upon  the  conclusion  of  which  the  committee 
arose  to  meet  again  on  Tuesday  evening,  the  6th  instant,  at  8 
o'clock  P.  M. 


TUESDAY,  March  6th,  1877. 
The  committee  met  pursuant  to  order. 

Present — Messrs.  Massey,  ITeely,  Clarke,  Ronald,  Gordon,  and 
Gray;  and  General  Bradley  T.  Johnson,  with  "William  L.  Royall, 
his  counsel. 

Mr.  O.  Horse}^,  a  witness  on  behalf  of  Messrs.  Johnson,  Poe  and 
iPoe,  being  first  duly  sworn,  deposeth  and  saith — 

Pending  the  further  taking  of  this  deposition  the  committee 
arose  to  meet  again  Wednesday,  March  7th,  at  4  o'clock  P.  M. 


WEDNESDAY,  March  7th,  1877. 

The  committee  met  pursuant  to  adjournment. 
Present — Messrs.  Massey,  ITeely,  Gordon,  Clarke,  and  Ronald ; 
land  the  further  examination  of  Mr.  Horsey  was  resumed. 

Deposition  of  Oitterbridge  Horsey. 

Question.  Mr.  Horsey,  where  do  you  live,  and  what  is  your  posi- 
tion? 

Answer.  In  Frederick  county,  Maryland,  about  three  miles  from 
the  Chesapeake  and  Ohio  canal;  have  lived  there  for  forty  years. 
I  am  a  director  on  the  part  of  the  state  in  the  Baltimore  and  Ohio 
railroad.  I  was  a  member  of  the  constitutional  convention  of 
Maryland  of  1867. 

5 


34 


Question.  State  what  you  know  about  tlie  management  of  tho' 
Chesapeake  and  Ohio  canal  for  the  last  twenty-five  years,  and  the 
influences  which  controlled  that  management. 

Answer.  Prior  to  1870,  the  management  of  the  canal  had  been 
purely  a  political  management,  with  all  the  drawbacks  incident  to 
such  a  system;  changing  with  every  change  of  administration  in 
the  state,  occurring  almost  every  two  or  four  j^ears;  so  much  so, 
that  every  effort  made  by  conservative  or  disinterested  persons  to 
place  the  canal  on  a  management  independent  of  party,  proved 
utterly  fruitless;  all  its  surplus  revenues  were  consumed  either  in 
repairing  improperly  constructed  dams,  or  fritted  away  among 
needy  and  blatant  pensioners  of  the  party  that  happened  to  be  in 
power.  Indeed,  so  much  so,  that  the  people  of  the  state,  who  had 
expended  nearly  twenty  millions  in  its  construction,  became  hope- 
less of  ever  receiving  from  it  any  return,  and  those  living  in  the 
western  counties  through  which  it  passes  regarded  it  as  an  institu- 
tion, the  business  of  which  was  to  accommodate  their  local  trade, 
and  the  surplus  revenues  of  which  were  to  be  distributed  amongst 
their  local  politicians.  This  demand  was  in  the  main  successful, 
except  that  the  president  and  some  of  the  other  officers  were  some- 
times taken  from  some  other  parts  of  the  state.  I  don't  mean  to 
say  that  all  the  revenues  were  actually  paid  to  the  officers  of  the 
canal  as  such.  But  that  if  there  was  any  surplus,  it  was  paid  to  the 
j)oliticians  indirectly,  through  contracts  for  various  matters,  in  the 
way  of  pretended  improvements  and  unnecessary  repairs — given  to 
the  politicians  or  their  friends.  This  state  of  affiiirs  continued 
until  the  act  passed  by  the  Maryland  legislature  in  the  spring  of 
1867,  directing  the  canal  to  be  turned  over  to  the  trustees  for  the 
jDreferred  bondholders. 

Question.  By  what  influence  was  the  act  of  1867  passed,  and  a 
change  in  the  policy  of  the  administration  of  the  canal  effi3cted  ? 

Answer.  The  passage  of  the  act  was  not  eflected  without  great 
labor  in  the  preparation  of  public  opinion.  It  was  procured  through 
the  direct  influence  of  the  leading  men  in  the  state.  These  gentle- 
men had  been  stimulated  to  their  exertion  to  procure  its  passage  by 
the  incessant  argument  and  appeals  of  General  Bradley  T.  Johnson 
and  his  associates,  made  to  them  directly,  together  with  the  co- 
operative influence  upon  them  of  his  personal  friends  in  the  state, 
whose  assistance  he  had  procured.  General  Johnson,  and  those 
who  co-operated  with  him,  had,  by  constant  interviews  with,  and 


35 


representations  to  sucli  gentlemen,  shown  them  the  condition  into 
which  the  management  of  the  canal  had  fallen  and  the  necessity 
that  existed  as  a  matter  of  justice,  right,  arid  true  policy  upon  the 
part  of  the  state  of  Maryland,  that  the  canal  should  be  put  under 
the  control  of  its  creditors.  That  act  failed  because  the  governor 
of  Maryland  refused  to  enforce  it  upon  constitutional  grounds,  and 
was  subsequently  repealed  by  the  constitutional  convention  of  1867. 
This  action  of  the  governor  and  the  convention  was  brought  about 
by  the  pressure  of  the  politicians  from  the  canal  counties.  But  the 
same  influences  which  had  procured  the  passage  of  the  act  of  1867 
continued  to  operate  upon  public  opinion  in  Maryland  until  the 
election  of  Governor  Bowie,  in  1869.  He  pressed  this  policy  upon 
the  attention  of  the  legislature  and  the  public,  and  ultimately  suc- 
ceeded, by  the  appointment  of  Colonel  James  C.  Clarke  as  presi- 
dent, whose  administration  for  the  first  time  imparted  vitality  to 
the  canal,  and  gave  to  the  people  of  the  whole  state  the  grounds  of 
hope  that  at  some  day  it  might  contribute  to  relieve  them  of  the 
burden  of  taxation.  This  result  was  mainly  accomplished  through 
the  persistent  efl:orts  of  Johnson  and  his  associates,  who  were  un- 
remitting throughout  the  entire  time,  in  every  quarter  where  they 
could  strengthen  the  feeling  and  movement  in  favor  of  a  proper 
management  of  the  canaL 

OUTERBIilDGE  HORSEY. 

Deposition  of  William  F,  Jaylor. 

Mr.  Wm.  F.  Taylor,  another  witness  of  lawful  age,  being  first 
duly  sworn,  deposeth  and  says: 

Question  1.  What  has  been  your  oflicial  position  since  1865  ? 

Answer.  I  have  been  auditor  of  public  accounts  since  the  first  ot 
July,  1865,  with  the  exception  of  the  interval  of  time  that  the  state 
was  under  military  rule. 

Question  2.  "What  are  your  opportunities  of  knowing  the  finan- 
cial condition  and  claims  of  the  state  ? 

Answer.  My  opportunities  of  knowing  the  financial  condition 
and  claims  of  the  state  have  been  and  are  as  favorable  as  those  of 
any  one  else,  and  in  many  respects,  better. 

Question  3.  What  estimate  was  placed  on  the  debt  due,  and  also 
on  those  guaranteed  by  the  state  for  the  Chesapeake  and  Ohio  canal 


36 


company  in  1867 ;  and  was  the  state's  liability  as  guarantor  con- 
sidered fixed  and  certain  ? 

Answer.  The  opinion  of  the  board  of  public  works,  and  my  own 
parlicularly,  was  that  the  Chesapeake  and  Ohio  canal  company  was 
virtually  insolvent,  and  that  the  debt  due  by  that  company  to  the 
state,  was,  of  course,  a  very  doubtful  one;  and  further,  that  the 
state's  liability  as  guarantor  upon  the  bonds  of  the  company,  under 
the  acts  of  March,  3  847,  for  extension,  and  of  1849,  for  repairs,  was 
sucli  that  there  was  no  escape  from  it. 

Question  4.  What  was  your  understanding  of  the  intention  and 
scope  of  the  resolution  of  February,  1867? 

Answer.  My  understanding  of  the  intention  and  scope  of  the  re- 
solution of  Februar3%  1867,  was,  that  it  conferred  plenary  powers 
upon  the  board  of  public  works  to  take  all  necessary  measures  to 
relieve  the  state  from  its  liabilities  as  guarantor  of  the  bonds  of  the 
company,  and  to  secure  as  far  as  possible  the  payment  of  the  in- 
debtedness of  the  company  to  the  state  for  the  coupons  paid  by  her; 
and  to  this  end,  to  contract  with  counsel,  as  provided  in  the  resolu- 
tion; in  other  words,  to  take  all  necessary  steps  to  relieve  the  state 
ot  its  liabilities  as  guarantor,  and  recover  what  she  had  paid  for  the 
company  in  the  shape  of  interest.  I  respectfully  ask  permission  to 
add,  as  the  only  remaining  member  of  the  board  of  public  works 
now  in  Virginia,  that,  in  my  opinion,  the  board  did  not  transcend  i 
the  authority  given  it  by  the  resolution,  and  that  in  this  opinion  I 
am  fortified  by  that  of  the  attorney-general,  to  whom  I  have  sub- 
'  mitted  the  question. 

Question.  Did  the  other  members  of  the  board  put  the  same  con- 
struction upon  the  joint  resolution  which  you  say  you  put  upon  it? 

Answer.  I  never  lieard  an  intimation. of  a  doubt  to  the  contrary. 
We  all,  jointly,  construed  it  to  mean  that. 

Question.  In  your  opinion,  has  the  state  been  benefitted  or  in- 
jured by  this  contract,  and  the  execution  of  it? 

Answer.  I  ani  of  opinion  that  the  contract  when  made  was  a 
most  judicious  one,  and  that  the  results  which  have  followed  have 
been  in  a  very  high  degree  beneficial  to  the  state. 
Cross-examined  by  committee : 

Question.  What  degree  of  publicity  was  given  to  the  contract 
wlien  made,  and  to  the  reports  made  by  counsel  at  various  times 
to  the  board  of  public  works  of  their  proceedings  under  said  con- 
tract? 


I 


37 

Answer.  As  far  back  as  the  time  of  the  contract,  it  is  difficult  for 
me  to  remember.  The  contract  was  made  at  the  same  session  of 
the  general  assembly  at  which  the  resolution  was  passed.  It  is  not 
usual  for  the  board  of  public  works  to  have  any  . of  their  proceed- 
ings published;  their  proceedings  are  public  records,  and  as  such 
open  to  the  inspection  of  the  public. 

Question.  Were  you  well  informed  as  to  the  financial  condition 
of  the  Chesapeake  and  Ohio  canal  company  in  February,  1867. 

Answer.  In  1867  I  had  no  very  special  knowledge  of  the  condi- 
tion of  the  Chesapeake  and  Ohio  canal  company.  The  state  was 
guarantor  for  the  bonds  of  the  Chesapeake  and  Ohio  canal  com- 
pany to  the  extent  of  $500,000,  and  had  been  paying  the  coupons 
for 'interest  of  the  company  for  several  years;  which  I  think  indi- 
cated pretty  clearly  an  embarrassed  condition  of  the  company. 
Much  of  the  information  on  which  the  board  acted  was  furnished 
by  Mr.  DeWitt,  who  was  then  secretary  of  the  board,  and  had  held 
that  office  for  a  long  time,  and  was  familiar  with  the  affairs  of  the 
canal  company.  He  gave  us  the  impression  that  the  canal  com- 
pany was  in  a  very  bad  condition. 

Question.  Did  you  take  any  steps  to  inform  yourself  as  to  the 
ability  of  the  Chesapeake  and  Ohio  canal  company  to  pay  the  debt 
due  to  Virginia  on  account  of  coupons  and  other  evidences  of  debt 
held  by  Virginia  against  the  said  company;  if  any,  what  steps? 

Answer.  It  is  impossible  for  me  to  tell  3^ou  at  this  late  day.  I 
have  no  doubt  in  the  world  that  there  was  steps  taken. 

Question.  "What  interval  was  there  between  the  passage  of  the 
joint  resolution  by  the  general  assembly  authorizing  the  board  of 
public  works  to  contract  with  counsel,  and  the  execution  of  the 
contract  between  the  board  of  public  works  and  the  counsel? 

Answer.  I  do  not  remember;  the  records  of  the  board  of  public 
works  will  show. 

Question.  By  whom  was  that  contract  drawn? 

Answer.  I  do  not  know,  sir. 

Question.  Were  the  terms  of  that  contract  discussed  and  agreed 
upon  by  the  board  before  it  was  presented  for  their  execution  ? 

Answer.  I  do  not  know  that  there  was  any  discussion  about  the 
contract,  or  any  extended  convei^ation.  The  matter  was  spoken 
of,  of  course.  I  w^as  satisfied  with  the  contract  as  altogether  advan- 
tageous to  the  state  in  the  then  condition  of  the  company.- 


38 

Question.  The  record  shows  that  the  joint  resolution  was  passed 
on  the  26th  day  of  February,  1867,  and  the  contract  entered  into 
on  the  27th  day  of  the  same  month;  did  the  board,  between  these 
dates,  confer  together  as  to  the  terms  upon  which  they  proposed  to 
employ  counsel,  or  w^as  their  decision  and  the  execution  of  the 
contract  arrived  at  at  one  and  the  same  meeting  of  the  board  ? 
Pending  the  further  examination  of  Mr.  Taylor,  it  was 
Eesolved,  That  the  chairman  of  the  committee,  Mr.  Massey,  in 
conjunction  with  the  counsel  for  Messrs.  Johnson,  Poe  and  Poe, 
continue  the  taking  of  the  depositions  on  behalf  of  General  John- 
son, and  on  behalf  of  the  committee,  without  the  presence  of  the 
other  members,  and  that  when  the  same  is  completed  a  meeting  of 
the  whole  committee  be  called — 

And  the  committee  arose  to  meet  again  on  Thursday,  March  8th,  at 
91  o'clock  A.  M. 


THURSDAY,  March  8th,  1877. 

The  chairman  of  the  committee,  Mr.  Massey,  met  ^vlth.  William 
L.  lloyall,  counsel  for  G-eneral  Johnson,  under  the  resolution  agreed 
to  on  yesterday,  and  the  examination  of  Mr.  W.  F.  Taylor  was 
proceeded  with. 

Answer.  It  is  impossible  for  me  to  tell,  at  this  late  day.  Just  ex- 
actly how  that  matter  was.  I  never  imagined  that  ten  years  after 
the  transaction  I  would  be  called  upon  to  give  the  details  of  the 
same,  and  never  charged  ray  memory  with  them.  The  leading 
points  in  the  case  I  think  I  remember  pretty  clearly. 
Re-examined: 

Question.  I  understand  from  your  deposition,  that  the  details  and 
circumstances  under  which  this  joint  resolution  was  passed,  and 
the  contract  thereunder  made,  have,  owing  to  the  length  of  time 
since,  passed  from  your  memory;  are  you  not  sure  that  at  the  time 
the  conJ:ract  was  made,  you  and  the  other  members  of  the  board 
informed  yourselves  fully  of  all  that  it  was  necessary  for  you  to 
know  in  order  to  deal  w^ith  the  subject. 

Answer.  I  would  not,  of  course,  have  consented  to  be  a  party  to 
a  contract  without  knowing  all  that  it  was  necessarj-  for  me  to 
know  in  order  to  deal  with  the  subject  intelligibly. 

And  further  this  deponent  saith  not. 

AYM.  F.  TAYLOR. 


39 


Dejoositioii  of  Josej^h  Bryan. 

Mr.  Joseph  Biyan,  another  witness  on  behalf  of  Messrs.  Johnson, 
Poe  and  Poe,  being  first  duly  sworn,  deposeth  and  says  : 

1st  question.  What  opportunities  have  ^-ou  had  for  becoming  ac- 
quainted with  the  past  and  present  management  of  the  Chesapeake 
and  Ohio  canal  company? 

Answer.  In  December,  1871,  Wm.  W.  Corcoran,  of  Washington, 
1).  C,  being  a  holder  of  preferred  bonds  of  the  Chesapeake  and 
Ohio  canal  company,  filed  his  bill  in  the  supreme  court  of  the  Dis- 
trict of  Columbia,  in  behalf  of  himself  and  of  all  other  holders 
of  the  same  kind  of  bonds,  to  "enforce  the  terms  of  the  trust  deed 
wliereby  said  bonds  were  secured.  Default  had  been  made  by  the 
company  in  the  payment  of  interest  on  said  bonds  since  about  1853. 
But  after  the  efi:brts  made  by  the.  state  of  Virginia  through  her 
attorneys,  Messrs.  Johnson  &  Poe,  the  canal  company  began  to 
pay  interest  on  the  preferred  bonds;  but  under  the  decree  of  the 
court  of  appeals  of  Maryland,  refused  to  pay  interest  on  the  coupons 
from  the  dates  of  their  respective  matuiities.  The.  suit  of  Mr. 
Corcoran  was  mainly  intended  to  enforce  this  right.  In  March, 
1872,  I  was  retained  by  Mr.  John  Stewart,  who  was  also  a  holder 
of  preferred  bonds,  to  manage  his  interests  in  the  Corcoran  suit.  I 
proceeded  to  Washington  and  had  a  conference  with  Messrs.  Car- 
lisle &  McPherson,  Mr.  Corcoran's  attornej^s  and  counsellors,  and 
subsequently  filed  a  formal  petition  to  make  Mr.  Stewart  a  party 
plaintiff  to  the  suit.  My  duties  as  attorney  and  counsellor  from 
that  time  to  this,  has  necessitated  an  extensive  examination  of  the 
conduct  of  the  canal  company. 

2d  question.  Have  you  a  contract  with  any  of  the  holders  of  the 
preferred  bonds  to  enforce  their  rights  against  the  said  company ; 
and  if  so,  wdiat  compensation  have  they  agreed  to  give  you  ? 

Answer.  The  suit  by  Mr.  Corcoran  being  for  the  recovery  only 
of  interest  on  the  coupons — which  was  considered  an  indisputable 
claim,  except  for  certain  technical  objections  of  a  purely  legal 
character — Messrs.  Carlisle  &  McPherson  had  contracted  with  Mr. 
Corcoran  for  a  contingent  fee  of  twenty  per  cent,  of  whatever  might 
be  recovered,  the  plaintiflTs  to  pay  all  expenses  incident  to  the  suit. 
I  made  the  same  contract  with  Mr.  Stewart.  It  was  understood 
between  Messrs.  Carlisle  &  McPherson  and  myself  that  we  would 


40 


divide  the  aggregate  of  our  several  fees.  The  amount  of  bonds 
held  by  Messrs  Corcoran  and  Stewart  was  about  ^500,000,  and  the 
amount  at  stake  in  the  litigation  was  over  $200,000. 

3d  question.  Do  you  know  how  much  the  canal  company  paid 
towards  the  liquidation  of  her  debts  between  August,  1848,  and 
June  1,  1870;  and  how^  much  between  June  1, 1870,  and  December 
1,1871? 

Answer.  From  a  report  of  the  president — James  C.  Clarke — of 
the  Chesapeake  and  Ohio  canal  company,  made  December  13,1871, 
it  appears  that  $234,807  04  was  paid  by  the  canal  on  liquidation  of 
the  debt  due  by  it  on  the  repair  and  preferred  bonds  from  August,. 
1848,  to  June  1,  1870,  while  $441,333  33  was  paid  on  the  same 
account  between  June  1,  1870,  and  December  1,  1871. 

4th  question.  Do  you  regard  the  contract  made  by  the  board  of 
public  works  with  Messrs.  Johnson  &  Poe  as  one  that  was  provident 
and  advisable  at  the  time  it  was  made?  and  do  you  regard  the  com- 
pensation which  the  board  agreed  to  give  them  as  out  of  proportion 
to  what  they  undertook  to  do? 

Answer.  Considering  the  management  of  the  canal  from  its  foun- 
dation, in  1824,  and  the  established  fact  that  it  had  been,  since  its 
completion  to  Cumberland,  in  1850,  used  chiefly  for  political  pur- 
poses, and  was  absolutely  under  the  control  of  the  dominant  polit- 
ical party  of  Maryland,  and  that  the  undertaking  of  the  counsel  of 
Virginia  was  not  merely  the  enforcement  of  legal  rights,  but  the 
control  of  political  influences  of  great  and  important  character — 
all  of  which  was  to  be  done  at  their  own  expense — and  their  reward 
or  compensation  to  be  only  in  the  evidences  of  debt  of  the  canal 
itself,  the  value  of  which  was  at  that  time  little  or  nothing,  I  regard 
the  contract  made  b}^  the  board  of  public  works  of  Virginia  with 
Messrs.  Johnson  &  Poe  as  favorable  as  could  have  been  made  with 
any  counsel  competent  to  carry  out  the  undertaking.  And  I  am 
further  of  opinion,  that  very  few  counsellors  or  attorneys  possessed 
the  legal  and  political  qualifications  or  pecuniary  resources  neces- 
sary to  carry  out  so  complicated  and  diflicult  an  undertaking. 

4th  question.  Do  you,  or  not,  think  that  they  (Johnson  k  Poe) 
executed  the  contract  upon  their  part  in  a  manner  that  entitles  them 
to  the  approbation  of  the  state  of  Virginia? 

Answer.  "With  the  exception  of  the  refusal  on  the  part  of  the 
court  of  appeals  of  Maryland  to  allow  Virginia  interest  upon  the 
coupons  paid  by  her  as  guarantor  of  the  repair  and  $300,000  of  the 


41 


preferred  bonds,  the  decree  of  that  court  in  the  snit  of  Virginia  vs. 
The  Chesapeake  and  Ohio  Canal  Company  was  extraordinarilj^,  and,, 
I  may  say,  unlawfully  in  favor  of  Virginia.  I  have  examined  the 
wliole  question  most  minutely,  and  I  am  unable  to  see  why  the  court 
of  appeals  of  Maryland  should  have  adopted  the  view  of  Messrs. 
Johnson  and  Poe,  that  the  repair  bonds  and  the  interest  accrued  on 
them  should  be  paid  before  the  preferred  bonds.  How  Messrs. 
Johnson  and  Poe  accomplislied  this  I  cannot  tell;  but  it  is  certain 
that  had  they  not  succeeded  Virginia  would  now  be  bound  for  those 
$200,000  of  bonds  and  the  arrearage  of  interest  for  twenty  years. 
Moreover,  the  court  of  appeals  of  Maryland  having  required  Vir- 
ginia to  wait  for  reimbursement  for  money  paid  by  her  as  guar- 
antor of  tlie  repair  bonds  until  the  whole  of  said  bonds  and  interest 
due  persons  other  than  Virginia  had  been  paid,  Messrs.  Johnson 
and  Poe  succeeded  by  arguments  unknown  to  me  in  inducing  the 
said  court  in  the  same  decree  to  reverse  its  own  decision  in  this 
respect  as  to  the  preferred  bonds,  and  to  decree  that  Virginia  should 
receive  repayment  for  coupons  paid  by  her  as  guarantor  of  such 
loouds  pari  passu  with,  other  holders.  Had  Virginia  been  required 
to  wait  for  repayment  in  the  case  of  the  preferred  bonds,  as  in  the 
case  of  the  repair  bonds,  she  would  now,  and,  in  all  probability^ 
would  for  many  years  continue  to  be  deprived  of  all  recovery  what- 
ever on  account  of  such  payments.  Besides,  in  regard  to  the 
$35,000  certificate,  I  cannot  see  how  the  court  allowed  that  certifi- 
cate to  be  ranked  as  coupons.  I  have  thought  it  was  a  noration, 
and  stood  on  little  better  footing  than  the  Selden  &  Withers  certfi- 
cate,  which  clearly  should  not  have  been  paid  out  of  the  revenues 
as  coupons.  I  think,  therefore,  that  the  counsel  of  Virginia  ac- 
complished more  than  could  have  been  expected  by  the  most  san- 
guine friends  of  the  state  who  had  any  knowledge  of  the  legal 
bearings  of  the  case,  not  to  mention  the  political  obstacles. 
Cross-examined  by  committee : 

Question.  Is  it  to  be  understood,  that  in  your  answer  to  question 
3d,  you  embrace  all  the  payments  made  by  the  canal  company  from 
August,  1848,  to  June  1st,  1870  ? 

Answer.  That  answer  was  taken  from  a  report  of  the  president 
of  the  canal  company,  and  I  understood  the  payments  therein  men- 
tioned as  made  between  August,  1848,  to  June  1,  1870,  to  embrace 
the  payments  made  on  account  of  the  repair  and  preferred  bonds 
and  interest  thereon — not  the  general  expenses  of  the  company. 
6  ' 


42 


Qaestion.  Have  you  examined  the  reports  of  the  president  of 
said  company  for -the  years  1865,  '66  and  '67? 

Answer.  The  earliest  report  of  the  canal  compaDy  after  the  war 
that  I  have  seen,  was  made  to  the  stockholders  in  June,  1868. 

Question.  Do  3^ou  know  the  amount  of  the  debt  due  by  said  canal 
company  to  the  state  of  Maryland,  wdiich  was  waived  and  deferred 
in  favor  of  the  bonds  issued  by  said  company,  known  as  ''preferred 
and  repair  bonds;"  if  so,  wdiat  was  the  amount? 

Answer.  The  lien  of  the  state  of  Maryland  upon  the  canal  com- 
pany, waived  by  her  act  of  1844,  chapter  280,  in  favor  of  the  pre- 
ferred bonds,  ''  not  repair  bonds,"  was  a  loan  of  two  millions  of 
dollars,  bearing  interest  at  the  rate  of  six  per  cent,  per  annum, 
made  by  her  to  the  canal  in  1834,  and  secured  by  a  mortgage  both 
on  the  tolls  and  revenues  and  the  corpus  of  the  canal. 

Question.  What  w^as  the  amount  of  the  entire  indebtedness  of 
the  said  company  to  the  state  of  Maryland  in  1867? 

Answer.  I  cannot  possibly  answer  this  question  without  a  re- 
ference to  documents  and  calculations  of  interest.  Besides  the 
$2,000,000  loan,  and  interest  thereon,  above  mentioned,  the  state  of 
Maryland  owuied  about  four  millions,  I  think,  of  preferred,  or  guar- 
anteed stock,  in  the  canal,  on  which  she  had  never  received  a  cent 
of  dividend;  all  of  wdiich  w^as  due  in  1867 — interest  on  this  sum 
being  at  the  rate  of  six  per  cent,  per  annum,  and  due  from  or  before 
about  1838. 

Question.  Could  the  state  of  Maryland  enforce  the  collection  of 
any  part  of  this  debt  from  the  canal  company  until  the  preferred 
liens  given  by  said  canal  under  authority  of  an  act  of  the  legisla- 
ture of  said  state,  w^ere  satisfied? 

Answer.  I  think  not.  But  the  canal  being  virtually  owned  b}^ 
the  state,  and  absolutely  controlled  by  her,  it  would  be  a  political 
question  merely,  whether,  as  to  her  own  interest  in  it,  she  should 
require  the  rates  of  toll  on  the  canal  to  be  such  as  to  pay  a  revenue 
into  her  treasury,  or  whether  she  should  charge  and  collect  only 
toll  enough  to  keep  the  canal  in  repair,  and  allow  it  to  be  used 
practically  as  a  free  highway  for  her  citizens.  This  latter  view  is 
now  urged  by  the  citizens  of  western  Maryland,  who  I  am  informed 
vehemently  oppose  the  present  management  of  the  canal,  as  being 
in  the  interest  of  the  bondholders.  That  is,  for  making  tolls  on  the 
<;anal  such  as  to  pay  a  revenue.  From  all  I  have  observed  of  the 
management  of  the  canal,  it  would  be  a  serious  question,  whether 


43 

i 

Maryland  would  ever  collect  a  revenue  from  the  canal,  above  ex- 
penses, after  the  preferred  bonds  and  interest  are  paid  off— and  her 

-  own  liens  come  in  next  for  liquidation. 

[As  chairman  of  the  committee,  and  authorized  by  it  to  take  de- 

' positions,  I  feel  it  my  duty,  while  not  objecting  to  the  fullest  ex- 
pression of  the  opinions  of  witnesses  in  response  to  any  question 

i.which  call  for  such  expressions,  to  object  to  that  portion  of  the 

1  above  answer  which  commences  with  the  word  "but,"  in  the  first 
line  of  answer  to  last  question,  and  ends  with  said  answer,  as  not 

'  being  responsive  to  the  question  asked. 

JIsTO.  E.  MASSEY,  Chairman,'] 

And  further  this  deponent  saith  not. 
I  .  JOS.  BRYAK 


Deposition  of  JR.  H.  31aury. 

Mr.  E.  H.  Maury,  another  witness  of  lawful  age,  being  first  duly 
sworn  as  a  witness  on  behalf  of  the  committee,  deposes  and-  says: 

[Mr.  Eoyall,  as  counsel  for  General  Johnson,  before  the  entry 
immediately  preceding  was  made,  requested  Mr.  Massey,  the  chair- 
man, to  have  the  entry  made  so  that  it  should  appear  that  the  wit- 
ness was  introduced  by  Mr.  Massey  himself,  and  not  by  order  of 
the  committee.] 

[This  I  decline  to  do  because  I  am  acting  for  and  by  authority  of 
the  whole  committee,  and  not  for  myself  alone. 

JOHN  E.  MASSEY,  ChaiTman.-] 

Question  1.  On  page  21  of  the  printed  statement  or  brief,  pre- 
pared by  General  Johnson  on  behalf  of  himself  and  associates,  the 
following  language  occurs,  viz.:  "We  believe  that  the  contract 
made  with  us  in  1867  will  be  found,  on  examination,  to  have  been  a 
provident  and  discreet  arrangement  for  the  interest  of  the  state; 
the  per  centum  of  compensation  was  fair,  as  is  proved  by  the  fact, 
that  at  that  very  time  we  made  a  similar  contract  with  Mr.  Robt. 
H.  Maury,  one  of  the  well-known  and  old  firm  of  R.  H.  Maury  & 
Co.,  brokers,  in  which  he  agreed  to  give  us  contingent  compensa- 
tion as  much  as  twenty  per  cent,  on  the  bonds  held  by  him,  amount- 
ing to  many  thousands  of  dollars:  provided  we  succeeded  in  having 
the  tolls  and  revenues  of  the  canul  company  appropriated  to  the 


44 


payment  of  its  lien  creditors."  Please  state  all  the  facts  and  cir- 
cumstances relating  to  the  making  and  execution  of  said  contract? 

Answer.  I  recollect  making  a  contract  with  General  Johnson, 
but  what  the  provisions  of  it  were,  I  do  not  now  distinctly  remem- 
ber, except  I  was  to  pay  in  kind  twenty  per  cent,  of  what  he  recov- 
ered. This  contract  was  made  with  me  under  tlie  impression  and 
understanding  on  my  part,  that  other  creditors  and  bondholders  would 
join  in  it,  and  it  was  represented  to  me  that  other  persons  holding 
bonds  had  agreed,  or  would  agree,  to  give  that  rate  of  compensa- 
tion. I  at  first  objected  to  the  compensation  as  being  too  much; 
but  finally  said  I  did  not  wish  to  be  benefitted  at  the  expense  of 
other  persons,  and  if  others  paid  that  amount  I  would  do  so  too. 
After  this  contract  was  made,  I  made  some  enquiries  and  found 
that  some  of  my  friends  who  held  considerable  amounts  of  these 
bonds  had  not  gone  into  the  arrangement;  and  that,  in  fact,  so  far 
as  I  could  ascertain,  no  party  but  the  state  had  made  the  arrange- 
ment; consequently,  on  meeting  General  Johnson,  some  twelve 
months  after  this,  I  asked  him  how  many  persons  had  signed  the 
contract  beside  myself  He  replied:  "ISTo  one."  When  I  said,  "  of 
course  then  you  do  not  hold  me  to  my  contract;"  he  replied,  cer- 
tainly not";  and  some  few  days  thereafter  called  in  my  ofiice  and 
cancelled  the  same  by  writing  across  the  face  of  the  duj)licate  con- 
tract held  by  me,  the  words:  ^'Cancelled  October  12,  1871,"  and 
signed,  ^'Bradley  T.  Johnson." 

Question  2.  Were  the  bonds  held  by  you  the  preferred  bonds  of 
the  Chesapeake  and  Ohio  canal  company? 

Answer.  Yes,  sir. 

Question  3.  Did  you  consider  the  canal  company  "  utterly  insol- 
vent" as  to  those  bonds  in  1867? 

Answer.  'No,  I  did  not;  but  I  thought  it  would  not  be  worth  any- 
thing to  the  bondholders,  unless  it  was  taken  out  of  the  hands  it 
was  then  in  'and  put  into  the  hands  of  a  good  management. 
Cross-examined  by  General  Johnson: 

Question  4.  Was  the  rate  of  compensation  the  only  reason  that 
you  had  for  desiring  to  withdraw  from  your  contract? 

Answer.  Yes,  sir. 

Question  5.  What  did  you  do  with  your  bonds? 
Answer.  I  held  them  until  1872,  and  sold  them. 
Question  6.  When  you  sold  them,  did  they  have  on  them  all  their 
coupons  up  to  that  time? 


if- 

Answer.  They  had  all  the  coupons  on  them  except  what  the  com- 
'pany  had  paid. 

Question  7.  What  did  you  get  for  them? 

Answer.  I  sold  the  bonds  for  their  face  value,  being  eighteen 
, thousand  dollars. 

Question  8.  Was  your  contract  with  General  Johnson  executed 
in  duplicate? 

Answer.  I  think  it  was. 

Question  9.  I  suppose,  then,  that  you  retained  one  copy  and  he 
(iretained  the  other;  am  I  right  about  this  or  not? 

Answer.  It  is  my  recollection  that  we  each  retained  a  copy. 

Question  10.  I  understood  you  to  say  that  it  was  about  twelve 
months  after  the  contract  was  executed  that  General  Johnson 
(returned  to  you  the  copy  which  he  had;  am  I  right  about  that  being 
the  length  of  time,  as  well  as  you  can  recollect,  or  not? 

Answer.  My  impression  is  that  it  was  twelve  months  or  longer, 
though  it  might  have  been  shorter. 
Ee-examined: 

Question  11.  What"  is  the  present  market  value  of  the  preferred 
boLds  of  the  Chesapeake  and  Ohio  canal  company  ? 

Answer.  I  have  no  personal  knowledge  of  their  value;  but  I  was 
told  by  a  gentleman  in  my  office  a  few  days  ago  that  they  had  sold 
as  low  as  70  or  75;  I  do  not  remember  distinctly  which. 
Re-cross-examined  : 

Question  12.  Is  not  a  bond  which  w^ould  sell  now  as  low  as  70  or 
75,  one  which  in  1870  had  all  the  accumulated  interest  due  upon  it 
since  the  time  the  canal  had  made  default?  and  is  it  not  one  upon 
which  much  of  that  accumulated  interest  has  since  1870  been  paid? 

Answer.  Yes. 

Re-examihed : 

Question  13.  Have  you  any  information  as  to  the  present  condi- 
tion of  the  canal  company  and  its  probable  ability  to  pay  its  pre- 
ferred bonds  and  the  interest  that  may  have  accrued  thereon ;  if  so, 
state  what  its  present  financial  condition  is? 

Answer.  I  have  no  personal  knowledge  of  the  condition  of  the 
company. 

[Mr.  Eoyall  (for  General  Johnson)  at  this  point  cautioned  the 
witness  that  whatever  he  states  that  he  may  have  heard  other 
persons  say,  is  not  evidence;  and  that,  therefore,  he  must  object  to 


46 

liis  making  any  statement  of  matters  that  he  does  not  know  him- 
self to  be  true.] 

Question  14.  Have  you  any  sucli  information  as  would  enable  you 
to  form  a  satisfactory  opinion  as  to  the  present  solvency  of  said 
company? 

Answer.  I  have  not. 

And  further  this  deponent  saith  not. 

E.  n.  MAURY. 

The  committee  thereupon  arose  to  meet  again  upon  the  call  of 
the  chairman. 


MONDAY,  March  12th,  1877. 

The  committee  met  pursuant  to  the  call  of  the  chairman,  and  no 
witness  being  present  for  examination,  the  committee  arose  to  meet 
again  Tuesday  evening,  the  13th  instant,  at  4  o'clock,  P.  M. 


TUESDAY,  March  13th,  1877. 
The  committee  met  pursuant  to  order. 

Present — Messrs.  Massej^,  Neely,  Clarke,  Ponald,  and  Gray. 

At  the  request  of  Mr.  Royall,  counsel  for  General  Johnson,  th^ 
following  statement  o*f  the  chairman,  Mr.  Massey,  was  spread  upon 
the  minutes  of  the  committee  as  a  part  of  tlie  record,  viz  : 

IStatement. 

On  the  day  after  the  deposition  of  Mr.  P.  H.  Maury  was  taken, 
he  called  for  me  in  the  House  of  Delegates,  and  informed  me  that 
he  had  been  mistaken  in  his  statement  that  the  contract  between 
him  and  General  Johnson  had  been  delivered  to  him  by  said  John- 
son and  destroyed  by  himself;  and  that  instead  thereof.  General 
Johnson  had  called  at  his  office  and  cancelled  the  duplicate  in  his 
possession,  and  that  he  had  been  authorized  by  General  Johnson 
to  make  this  correction  in  his  testimon3\  I  thereupon  placed  in 
his  hands  the  depo'Sition  which  he  had  given,  authorizing  him  to 
make  the  correction;  he  then  erased  the  words  at  the  end  of  his 


47 


answer  to  the  first  question,  "  returned  rae  the  contract,  which  I  cle^ 
strojed,"  and  wrote  upon  the  riiargin  of  his  deposition  the  words  : 
"Called  in  ni}^  office  and  cancelled  the  same  by  writing  across  the 
'[face  of  the  duplicate  contract  held  by  me  the  words,  ^cancelled' 
^October  12,  1871,  and  signed  Bradley  T.  Johnson." 

JOHl^  E.  MASSEY,  Chairman. 

Deposition  of  Bradley  T.  Johnson, 

Bradley  T.  Johnson,  a  witness  of  lawful  age,  being  duly  sworn,, 
testifies : 

Question.  State  wdiat  you  know  about  the  circumstances  in  wdiich 
-the  contract  was  made  between  you  and  Messrs.  Poe  and  the  board 
of  public  works,  and  under  which  the  joint  resolution  of  the  gen- 
eral assembly  was  passed  ? 

Answer.  In  1867,  a  meeting  w-as  held  of  some  of  the  preferred 
bondholders  of  the  Chesapeake  and  Ohio  canal  compan}^,  in  Balti- 
more. In  consequence  of  it,  Mr.  IsTeilson  Poe,  a  lawyer  of  Balti- 
more of  reputation,  and  40  years  standing,  came  to  Richmond  and 
applied  to  me  to  get  Virginia  to  make  the  effort  to  take  the  canal 
from  its  then  present  management,  and  by  procuring  its  tolls  and 
revenues  to  be  appropriated  to  the  payment  of  the  preferred  bonds 
under  more  vigilant  and  proper  management,  to  secure  the  state. 
I  applied  to  the  board  of  public  w^orks  for  some  arrangement  which 
would  conduce  to  that  end.  They  informed  me  that  under  the  law 
then  existing  they  had  no  power  to  make  any  such  arrangement; 
that  some  action  of  the  general  assembly  would  be  necessary  to 
authorize  them  to  make,  such  arrangement.  The  arrangement  we 
proposed  was,  that  they  should  authorize  us  to  prosecute  the  claim 
of  Virginia  as  creditor,  and  also  as  entitled  to  the  preferred  liens 
on  the  tolls  and  revenues  of  the  canal,  to  save  her  as  guarantor,  our 
compensation  to  be  contingent,  and  payable  out  of  the  claims  held 
by  the  state.  They  were  willing  to  make  that  arrangement,  but 
thought  they  lacked  power.  In  consequence  of  their  views,  Mr. 
Poe  and  myself  prepared  the  joint  resolution,  and  put  it  in  the 
hands  of  Judge  Ould,  senator  from  Richmond,  who  introduced  it 
in  the  Senate  February  23d.  It  passed  the  Senate  the  same  day, 
and  on  the  26tli  February  passgd  the  House.  On  the  next  day  the 
board  made  the  contract,  the  terms  having  thus  been  agreed  upon 
before  the  resolution  was  introduced.    On  the  same  day  the  board 


48 


executed  a  power  of  attorney  to  us  to  represent  them  in  all  meet- 
ings of  the  preferred  bondholders,  a  copy  of  which  I  herewith  file, 
marked  exhibit  "A."  Sometime  afterwards,  we  found  that  the 
legislature  of  Maryland  would  adjourn  about  the  first  of  April. 
Many  preferred  bondholders  had  employed  their  counsel  to  assist 
in  the  prosecution  of  this  matter,  and  it  became  impossible  to  get  a 
general  meeting  of  preferred  bondholders.  The  sessions  of  the 
Maryland  legislature  are  biennial,  and  if  we  did  nothing  at  the  then 
session,  we  could  do  nothing  for  two  years.  We,  therefore,  asked 
the  board  to  fix  our  compensation  at  once.  They  did  so,  and  thence 
the  fact  that  the  contract  was  made  and  the  compensation  fixed  at 
the  time  they  were  made  and  fixed. 

Question.  State  all  the  facts  attending  your  contract  with  Mr.  E. 
H.  Maury,  and  the  end  of  the  same  business? 

Answer.  Our  first  intention  was  to  have  a  general  meeting  of  the 
preferred  bondholders,  to  have  them  fix  the  compensation.  In  con- 
sequence thereof,  the  board  gave  us  a  power  of  attorney  to  represent 
them  in  a  general  meeting  on  February  27,  the  same  day  the  first 
contract  was  made.  Under  it  w^e  had  full  pow*er  to  fix  our  compen- 
sation at  fifty  per  cent.,  for  no  limit  was  named.  The  next  day,  Mr. 
Maury  gave  me  the  powxr  of  attorney,  a  copy  of  w^hich  is  hereto 
iinnexed,  as  exhibit  ''B."  We  then  went  on  with  our  business.  In 
October,  1871,  after  the  court  of  appeals  of  Maryland  had  settled 
the  whole  matter,  and  after  we  had  made  our  settlement  with  the 
board  of  August,  1871,  I  cancelled  the  power  of  attorney  given  by 
Mr.  Maury.  IsTo  general  meeting  had  ever  been  held  of  preferred 
bondholders;  therefore,  Mr.  Maury's  liability  had  never  been  fixed; 
nnd  then  it  was  too  late  to  call  a  meeting,*for  the  work  had  been 
done.  'No  meeting  would  then  have  paid  us  anything,  for  the  bond- 
holders had  got  the  benefit  of  our  work;  therefore,  I  cancelled  the 
whole  thing.  After  Mr.  Maury  had  testified  the  other  day,  and  I 
was  informed  of  the  substance  of  his  testimony,  I  went  to  General 
Ivogers,  as  the  particular  friend  of  Mr.  Maury,  and  showed  him  the 
original  instrument  executed  by  Mr.  ^laury,  which  he  had  testified 
he  had  destroyed,  and  asked  him  to  see  Mr.  Maury  and  show  him 
what  a  mistake  he  had  fallen  into.  In  an  hour  or  two,  Mr.  Maury 
came  to  me  and  expressed  his  thanks  that  I  had  taken  this  means 
of  showing  him  his  error.  I  told  him  that  it  was  necessary  for  me 
to  have  it  corrected,  and  I  would  be  glad  to  have  him  correct  it,  or 
I  should  do  so.    The  next  day  he  came  to  me  and  showed  me  the 


49 


duplicate  of  the  power  of  attorney,  which  he  had  found  in  the  mean- 
time; and  I  again  stated  to  him  the  necessity  of  his  error  being  cor- 
rected. I  told  him  that  I  would  be  glad  if  he  would  do  so;  if  not, 
I  should  correct  it.   He  then  went  off  to  see  Mr.  Mjissey.   I  ask  the 

,  committee  to  permit  me  to  file,  as  part  of  my  case,  the  printed 
pamphlet  entitled  The  Commonwealth  of  Virginia  against  The 
State  of  Maryland,  the  Chesapeake  and  Ohio  Canal  Company  and 

,  others;  and  also,  the  written  statement  of  Mr.  John  P.  Poe,  one  of 
my  associates,  as  his  statement  and  argument  before  the  committee. 

^  BRADLEY  T.  JOHKSOK 

i 

EXHIBIT  "A," 

Filed  with  General  Bradley  T.  Johnson^s  deposition. 

Know  all  men  by  these  presents,  That  the  board  of  public  works 
of  the  state  of  Virginia,  by,  and  in  pursuance  of  a  joint  resolution 
[  of  the  general  assembly,  passed  February  26th,  1867,  do  hereby 
constitute  and  appoint  William  W.  Crump,  Esq.,  and  Bradley  T. 
I  Johnson,  Esq.,  of  the  city  of  Richmond,  and  Neilson  Poe,  Esq.,  and 
•  John  P.  Poe,  Esq.,  of  the  city  of  Baltimore,  to  be  attorneys  of  the 
|i  State  of  Virginia  for  her  and  in  her  name  to  institute  legal  pro- 
;  proceedings  and  take  all  necessary  steps  to  secure  and  enforce  the 
liens  of  the  state  in  the  Chesapeake  and  Ohio  canal  company  on  its 
tolls  and  revenues,  whether  in  courts  or  before  the  general  assem- 
ibly  of  the  state  of  Maryland,  and  for  that  purpose  to  call  general 
meetings  of  the  preferred  creditors  of  said  canal  company,  and  to 
represent  the  interests  of  the  state  of  Virginia  therein. 
I    Richmond,  February  27,  1867. 

F.  H.  PEIRPOIKT, 

Governor  of  Virginia, 
And  President  Board  of  Public  WorI{s. 

'  WM.  F.  TAYLOR, 

I  Auditor  of  Public  Accounts. 

''V  By  order  of  board  of  public  works. 

In  testimony  whereof  we  have  hereunto  set  the  seal  of  said  board 
^  and  affixed  our  names,  this  day  and  year  aforesaid. 
,     [Seal]  .  J.  M.  HERKDOISr, 

Secretary  of  Commonwealth, 
7  And  ex- officio  Clerk  Board  of  Public  Works. 

I 


50 


EXHIBIT  ''B," 

Filed  with  Geiieral  JoJmson's  deposition. 

(      25  ct.       )   R.  H.  Maury,  Banking-House  of 

\  U.  S.  Stamp,  y  J.  L.  Maury,  R.  11.  MAURY  &  CO., 

(  Cancelled,   j   R.  T.  Brooke.    Richmond,  Va.,  Feb,  28, 1867. 

Know  all  men  by  these  presents.  That  I,  Robert  H.  Maury,  do 
hereby  appoint  Bradley  T.  Johnson  my  attorney  to  represent  me 
in  a  general  meeting  of  the  preferred  creditors  of  the  Chesapeake 
and  Ohio  canal  cornpany,  or  any  subsequent  meetings  thereof,  hereby 
authorizing  him  to  make  any  arrangement  for  procuring  possession 
of  the  tolls  and  revenues  of  the  canal  so  that  they  may  be  appro- 
priated to  the  payment  of  the  preferred  creditors ;  and  to  agree  to 
any  compensation  to  be  paid  to  counsel  for  procuring  the  same : 
provided  that  such  compensation  does  not  exceed  twenty  per  cent, 
of  the  amount  recovered,  and  that  I  am  saved  harmless  from  all 
costs  of  any  proceedings  which  may  be  determined  upon,  whatever 
may  be  the  result  of  such  proceedings. 

"Witness  my  hand  and  seal,  this  28th  February,  1867. 

[Seal.]  R.  H.  MAURY. 

My  interest  is  |17,500  of  the  honds^  with  coupons  from  January, 
1852,  attached. 


Exhibit  filed  with  Genercd  Johnson's  deposition. 

Extract  from  the  original  inventory  of  the  personal  estate  of 
George  Poe,  Jr.,  deceased,  filed  and  recorded  in  the  office  of  the 
register  of  wills  for  Washington  county.  District  of  Columbia. 

Par  Value.      Market  Value. 

^  35  canal  bonds,  $1,000  each,  10  cents  on  dollar,  35,000  3,500 
'  10        .     "  500  "  "        5,000  500 

4  certificates,     1,200  "  "  4,800 

A  true  extract — Teste: 

[Seal.]  ^  A.  WEBSTER, 

Register  of  Wills. 

March  15,  1877. 


51 


My  Dear  General  : 

At  the  instance  of  E"eilson  Poe,  Esq.,  of  Baltimore,  Md.,  I  enclose 
the  above  extract  taken  from  the  original  inventory  of  the  personal 
estate  of  the  said  decedent,  and  hope  it  will  answer  the  purpose 
intended. 

Yours,  very  truly, 

A.  WEBSTER, 
Begistcr  of  Wills,  D.  C. 

lo  General  Bradley  T.  Johnson, 

1014  31ain  street,  Eichmoiid,  Va. 


Deposition  of  General  Asa  JRogers. 

General  Asa  Rogers,  another  w^itness  of  lawful  age,  being  first 
^duly  sworn,  deposeth  and  eaith: 

Question.  Are  you  acquainted  with  the  handwriting  of  Mr.  R. 
II.  Maury? 

Answer.  I  am. 

Question.  Is  the  paper  now  shown  you,  purporting  to  be  a  power 
of  attorney,  executed  on  February  28th,  1867,  by  said  Maury  to 
General  Bradley  T.  Johnson,  in  the  handwriting  of  Mr.  R.  H. 
Maury? 

Answer.  It  is. 

Question.  Examine  the  paper  now  shown  you,  marked  "B,"  and 
marked  as  an  exhibit  and  part  of  General  Johnson's  deposition,  and 
say  whether  or  not  it  is  a  true  and  correct  copy  of  the  power  of 
attorney  referred  to  in  the  preceding  question  ? 

Answer.  It  is. 

And  further  this  deponent  saith  not. 

ASA  ROGERS. 

.  The  committee  thereupon  arose  to  meet  again  Wednesday  the 
14th  instant,  at  4  o'clock  P.  M. 


52 


WED^^ESDAY,  March  14th,  1877. 

Mr.  Massej,  the  chairaian  of  the  committee,  met  with  Mr.  Wil- 
liam L.  Royal. 

Deposition  of  Hamilton  G.  Fant. 

Hamilton  G.  Fant,  a  witness  of  lawful  as^e,  being  first  duly  sworn, 
deposes  and  says  as  follows: 

Question.  What  is  your  business? 

Answer.  I  was  a  banker  and  broker  from  1850  to  the  fall  of 
1873,  in  the  city  of  Washington,  D.  C. 

Question.  Have  you,  as  such,  dealt  in  or  owned  any  of  the  pre- 
ferred bonds  of  the  Chesapeake  and  Ohio  canal  company? 

Answer.  I  have  dealt  in  and  owned  them,  as  a  member  of  the 
firm  of  Sweeny,  Eittenhouse,  Fant  &  Company,  and  other  firms 
made  up  of  the  same  parties  in  part. 

Question.  Are  you  able  to.  state  what  was  the  market  value  of 
those  bonds  at  various  times? 

Answer.  In  1852,  the  first-named  firm  purchased  $30,000  of  said 
bonds,  I  think  at  80  or  85  cents  in  the  dollar.  I  think  there  was 
no  interest  due  upon  them  then.  Payment  of  interest  having  been  , 
suspended,  they  gradually  depreciated  in  value  until  they  reached, 
before  the  close  of  the  war,  to  twelve  cents  on  the  dollar  of  prin- 
cipal, with  the  interest  accumulated  from  1852  thrown  in.  In  the 
fall  of  1870,  I  offered  the  |30,000  of  bonds  referred  to  above  as 
having  been  purchased  by  my  firm,  to  Bradley  T.  Johnson^  of 
Eichmond,  at  38,  including  the  accumulated  interest,  and  he  took 
$10,000  of  them  at  that  price.  Shortly  thereafter  I  sold  the  re- 
maining $20,000  to  other  parties  at  38,  including  the  accumulated 
interest  from  1852. 

Question.  "What  is  the  highest  that  you  have  known  them  to  sell 
for  since  then? 

Answer.  I  think  they  have  sold  for  125,  including  arears  of  in- 
terest. 

Cross-examined  by  Mr.  Massey: 
Cross-question.  Where  do  you  now  reside,  nnd  Avhat  is  your 
occupation  ? 

Answ^er.  I  reside  in  W^ashington  city,  and  am  a  broker. 


53 


Question.  Do  you  know  the  present  market  value  of  the  prefer- 
red bonds  of  the  Chesapeake  and  Ohio  canal  company  ? 
Answer.  I  do  not. 

Question.  Were  the  bonds  which  you  and  your  company  owned 
those  that  were  guaranteed  by  the  state  of  Virginia? 
Answer.  They  were  not. 

Question.  Have  you  no  information  as  to  the  present  value  of 
those  bonds? 

Answer.  I  have  not,  except  that  I  have  learned  that  they  have 
depreciated  since  1873;  how  much  I  do  not  know. 

Question.  Do  you  know  how  far  the  canal  company  is  in  default 
in  the  jmyment  of  interest  on  its  preferred  bonds? 

Answ^er.  I  have  learned  from  one  of  its  directors,  from  July,  1864, 
(I  think)  to  January  1st,  1877. 

Question.  Are  any  of  the  bonds  of  that  company  now  on  the 
market  foj:  sale? 

Answ^er.  I  have  heard  of  none. 
Re-examined  by  Mr.  Royal : 

Question.  Has  not  all  the  interest  that  has  been  paid  since  1852, 
which  I  understand  you  to  say,  from  your  best  information,  is  all 
the  interest  due  from  1852  to  1864,  been  paid  since  the  begining  of 
the  prosecution  by  General  Johnson  and  his  associates  of  the  state's 
claim  vs.  the  canal? 

Answer.  The  canal  began  paying  the  deferred  interest,  as  I  under- 
stand, in  1870  or  1871. 

Question.  As  well  as  you  are  informed,  they  had  not  paid  any  in- 
terest between  1852  and  1870  or  1871?  Am  I  right  in  under- 
standing this  to  be  your  meaning? 

Answer.  You  are  right;  your  understanding  is  correct. 
Re-cross  examination  by  Mr.  Massey : 

Question.  Were  you  familiar  with  the  financial  affairs  of  the 
company  from  the  end  of  the  war,  in  1865,  to  the  period  of  1873  ? 

Answer.  I  w^as  not. 

Question.  Can  you  then  state  certainly  that  the  company  paid  no 
interest  between  those  periods? 

Answer.  My  information  was  derived  from  notices  of  the  com- 
pany published  in  the  newspapers  of  Washington  or  Baltimore^ 
that  they  would  pay  at  a  given  date  the  coupons  of  said  company, 
-covering  the  period  which  the  coupons  had  matured. 


54 


Question.  Did  those  notices  state  that  no  interest  had  been  paid" 
on  account  of  matured  coupons  ? 

Answer.  Thej  did  not.  It  only  stated  the  deferred  coupons ^ 
which  would  be  paid  on*  a  given  date. 

Question.  Have  you  any  of  those  notices;  if  not,  can  you  give' 
the  exact  purport  of  them  ? 

Answer.  I  have  not  the  notices,  but  as  near  as  I  can  recollect, 
they  notified  the  holders,  say  commencing  with  coupons  of  '52  and 
'53,  would  be  paid,  and  sometimes  confined  to  coupons  of  one  year, 
depending  upon  the  amount  of  money  on  hand,  I  suppose,  at  the 
time  of  the  notice.    This  is  my  recollection  of  the  notices. 

Question.  What  was  the  date  of  the  first  notice  which  attracted 
your  notice  ? 

Answer.  My  recollection  is,  in  the  fall  of  1870,  or  in  the  spring 
or  summer  of  1871. 

Question.  "Were  you  aware  that  the  earnings  of  the  canal  com- 
pany during  the  years  of  1865,  '66,  '67  and' '68,  were  largely  in  ex- 
cess of  its  expenses  ? 

Answer.  I  have  stated  that  I  was  not  familiar  with  the  affairs  of 
the  company,  and  cannot  answer  the  question. 

Question.  Do  I  then  understand  you  to  say  that  you  don't  know 
whether  the  canal  company  paid  any  of  its  past  liabilities  prior  to 
1870,  or  not? 

Answer.  I  do  not. 

Further  this  deponent  saith  not. 

HAMILTON  G.  FAIS^T. 

The  evidence  in  the  investigation  on  both  sides  being  concluded^ 
the  committee  arose  to  meet  again  on  the  call  of  the  chairman  for 
the  purpose  of  considering  their  report. 


JOURNAL 

OF  THE 

BOARD  OF  PUBLIC  WORKS. 


WEDNESDAY,  February  27th,  1867. 
Present — All  the  members. 

Resolved,  That  the  board  of  public  works,  by  and  in  pursuance 
of  a  joint  resolution  of  the  general  assembly,  passed  February  26, 
1876,  do  hereby  constitute  and  appoint  William  W.  Crump,  Brad- 
ley T.  Johnson,  ISTeilson  Poe,  and  John  P.  Poe,  to  be  the  attorneys 
of  the  state  of  Virginia,  fo?  her,  and  in  her  name,  to  institute  legal 
proceedings,  and  take  all  necessary  steps  to  secure  and  enforce 
the  liens  of  the  state  on  the  Chesapeake  and  Ohio  canal  company^ 
or  its  tolls  and  revenues,  whether  in  courts  or  before  the  general 
assembly  of  the  state  of  Maryland;  and  for  that  purpose  to  call 
general  meetings  of  the  preferred  creditors  of  said  canal  company, 
and  to  represent  the  interest  of  the  state  of  Virginia  therein. 

The  following  contract  was  submitted  to  the  board,  read,  consid- 
ered, and  approved: 

Whereas  the  general  assembly  of  Virginia  did,  on  the  26th  day 
of  February,  1867,  pass  the  following  joint  resolution  : 

Be  it  resolved  by  the  general  assembly.  That  the  board  of  public 
works  be  and  they  are  hereby  authorized  and  directed  to  adopt  such 
measures  as,  in  their  judgment,  may  be  necessary  and  advisable  to 
realize  the  preferred  liens  of  the  state  upon  the  tolls  and  revenues 
of  the  Chesapeake  and  Ohio  canal  company,  and  for  that  purpose 
to  contract  with  counsel  for  the  enforcement  of  said  liens  in  concert 
with  other  holders  of  similar  liens:  provided  however,  that  the 


56 


compensation  of  such  counsel  shall  be  contingent  only,  and  shall 
be  paid  by  said  board  only  out  of  the  proceeds  to  be  realized  from 
such  proceedings,  or  the  debts  and  liens  secured  thereby; 

And  whereas  the  state  of  Virginia  is  interested  in  the  Chesapeake 
and  Ohio  canal  company  for  five  hundred  thousand  dollars  of  bonds 
issued  by  said  company,  which  bonds  have  been  guaranteed  by  the 
state;  and  whereas  the  said  company  is  utterly  insolvent,  whereby 
said  state  is  really  bound  for  the  full  amount  of  said  bonds,  to  wit :  the 
sum  of  five  hundred  thousand  dollars;  and  the  said  state  is  further 
creditor  of  said  canal  company  in  the  sum  of  two  hundred  and 
ninety-one  thousand  dollars,  for  interest  paid  on  said  bonds,  and 
also  in  the  sura  of  two  hundred  and  eight  thousand  dollars  due  on 
bonds  held  by  the  state,  with  interest  from  the  first  of  January, 
1852,  and  for  other  sums  due  on  other  bonds  which  have  been  lost, 
stolen,  or  rnislaid,  on  which  also  interest  is  due  ; 

And  whereas  it  is  represented  to  this  board,  that  if  the  tolls 
and  revenues  of  said  canal  are  appropriated  to  the  payment  of 
these  debts  due  the  state  of  Virginia,  and  other  like  debts  due 
other  persons  of  like  dignity,  that  said  revenues  and  tolls  will  be 
sufficient  to  infuse  large  value  into  interests  which  are  now  totally 
unproductive,  and  will  relieve  the  state  from  her  aforesaid  liability 
as  guarantor,  by  providing  for  the  payment  of  the  interest  on  said 
bonds  as  guaranteed  as  aforesaid;  therefore. 

The  board  of  public  works  of  the  state  of  Virginia,  in  pursuance 
of  the  authority  given  by  the  hereinbefore-recited  joint  resolution 
of  the  general  assembly,  do  hereby  agree  and  contract  with  Bradley 
T.  Johnson,  of  the  city  of  Eichmond,  and  ]^eilson  Poe  and  John 
P.  Poe,  of  the  city  of  Baltimore,  of  the  second  part,  that  the  parties 
of  the  second  part  shall  undertake  to  secure  the  aforesaid  debts  and 
interest  of  said  state  in  said  canal  company,  by  securing  posses- 
sion of  the  canal  and  appropriating  its  tolls  and  revenues  to  the 
payment  of  the  said  debts  and  liabilities,  and  other  debts  and  lia- 
bilities due  by  the  canal  company  to  other  parties,  as  well  as  to 
said  state;  and  to  secure  this  end,  the  said  board  of  public  works  do 
hereby  constitute  and  appoint  the  said  parties  of  the  second  part 
the  attorneys  of  the  said  state,  for  her,  and  in  her  name,  to  take  all 
such  proceedings  as  may  be  necessary,  at  law  or  in  equity,  before 
any  court,  anywhere,  or  before  the  general  assembly  of  Maryland, 
to  secure  said  interests  and  debts  of  said  state,  by  procuring  pos- 
session of  the  tolls  and  revenues  of  said  canal,  and  appropriating 


67 


them  to  the  payment  of  the  said  debts  due  said  state  and  liabilities 
for  wbic^  she  is  security  as  aforesaid,  and  the  like  debts  due  by  the 
canal  to  other  creditors. 

And  it  is  expressly  agreed  and  understood  between  the  parties  to 
these  presents,  that  the  said  parties  of  the  second  part  shall  bear  all 
the  expenses  and  cost  of  any  proceeding  which  they  shall  institute 
and  carry  on,  and  that  they  shall  indemnify  the  state  of  Virginia 
from  all  costs  and  charges  whatsoever  incurred  by  them  in  the 
prosecution  of  any  proceeding  commenced  in  the  name  of  the  state, 
either  separately  or  in  connection  with  other  creditors. 

And  it  is  further  understood  and  agreed,  that  whenever  the  said 
canal  or  its  tolls  and  revenues  are  delivered  over  into  the  posses- 
sion of  the  preferred  creditors  thereof,  and  of  which  the  state  is 
one,  as  hereinbefore  set  forth,  then  in  that  case  the  parties  of  the 
second  part  are  to  be  considered  as  having  performed  their  obliga- 
tions under  this  contract  and  agreement,  and  to  have  secured  the 
said  debts,  liabilities  and  liens  of  said  state  on  said  canal. 

And  the  said  board  of  public  works  of  the  state  of  Virginia,  by 
and. in  pursuance  of  the  authority  vested  in  them  by  the  herein- 
before set  forth  joint  resolution,  do  hereby  covenant  and  agree  to 
pay  and  assign  in  bonds  or  coupons  of  said  canal  company  to  the 
parties  of  the  second  part,  as  soon  as  said  canal  or  its  tolls  and 
revenues,  are  delivered  or  appropriated  to  the  preferred  creditors 
thereof,  such  per  centum  of  the  debts  due,  liabilities  guaranteed 
and  claims  against  said  canal,  held  or  guaranteed  by  said  state,  as 
shall  be  determined  by  a  general  meeting  of  the  preferred  creditors 
of  said  canal  company  to  be  just,  proper,  and  sufficient  compensa- 
tion for  like  services. 

(Signed)  F.  H.  PEIRPOINT, 

Governor  of  Virginia^ 
President  Board  of  Public  Works. 
W.  F.  TAYLOR, 

Auditor  of  Public  Accounts. 
BRADLEY  T.  JOHNSOJST, 
IS^EILSOK  POE, 
JOHN  P.  POE. 


And  then  the  board  adjourned. 

(Signed) 

8 


F.  H.  PEIEPOmT; 


4 


58 


TUESDAY,  5th  March/  1867. 

Present — All  the  members. 

The  following  supplemental  contract  was  submitted  to  the  boards 
read  and  approved: 

"Whereas,  on  the  twentj-sixth  day  of  February,  1867,  the  board  of 
public  works  of  Virginia  agreed  with  Bradley  T.  Johnson,  IsTeilson 
Poe  and  John  P.  Poe,  that  they  should  procure  the  Chesapeake  and 
Ohio  canal  or  its  tolls  and  revenues  to  be  delivered  over  to  the  pre- 
ferred creditors  thereof,  or  trustees  for  their  benefit,  and  as  soon  as 
said  work  was  done,  then  to  pay  said  parties  such  compensation  as 
might  be  agreed  on  by  a  general  meeting  of  preferred  creditors  as 
fit  and  proper  compensation  in  such  cases,  all  proceedings  to  be  at 
the  expense  of  the  parties  of  the  second  part;  and  w^hereas  all  par^ 
ties  consider  it  better  to  have  the  compensation  fixed  and  agreed 
upon  at  on'ce,  without  waiting  for  the  general  meeting:  therefore 
it  is,  this  fifth  day  of  March,»1867,  agreed  between  said  board  and 
said  Johnson,  Poe  and  Poe,  that  the  rate  of  compensation  shall  be 
twenty  per  cent,  of  the  debts  due  to,  liabilities  guaranteed,  and 
money  paid  by  the  state  of  Virginia  to,  for  and  in  behalf  of  the 
Chesapeake  and  Ohio  canal  company,  which  rate  shall  be  in  lieu  of 
that  referred  to  in  original  agreement,  and  which  amount  ghall  be 
paid  the  parties  of  the  second  part  in  bonds,  coupons  or  other  in- 
debtedness of  the  canal  company  in  the  hands  of  and  belonging  to 
the  state,  as  soon  as  said  canal  or  its  tolls  and  revenues  is  delivered 
or  appropriated  to  the  preferred  creditors  thereof,  or  trustees  for 
them. 

Witness  our  hands  and  the  seal  of  said  board. 

(Signed)  F.  H.  PEIRPOIXT, 

Governor  of  Virginia^ 
W.  F.  TAYLOR, 

Auditor  of  Public  Accounts,. 
J.  S.  CALVERT, 

Treasurer  of  Virginia, 


59 

By  order  of  the  board  of  public  works  of  the  commonwealth  of 
Virginia,  I  have  hereunto  set  the  seal  of  said  board  this  5th  day 
of  March,  A.  D.  1867. 

[Seal.]  J.  M.  HERNDO^^-, 

^  Secretary  of  Commonwealth ^ 

And  Clerk  of  the  Board  of  Public  Works. 

.    We  hereunto  set  our  hands  and  seals,  this  day  and  year  aforesaid. 

BRADLEY  T.  JOH^TSO^T,  [Seal.] 
NEILSOI^  POE,  [Seal.] 

^  JOim  P.  POE,  [Seal.] 

And  then  the  board  adjourned. 

F.  H.  PEIRPOINT. 


SATURDAY,  18th  May,  1867. 

Present — All  the  members. 

The  board  of  public  works,  deeming  it  of  importance  that  the 
sale  of  the  real  estate  and  other  securities  formerly  held  by  the 
late  firm  of  Selden,  Withers  and  Company  should  be  postponed, 
in  view  of  the  new  arrangement  about  to  be  made  with  the  bond- 
holders of  the  Chesapeake  and  Ohio  canal  company,  under  a  late 
law  of  the  state  of  Maryland;  be  it,  therefore, 

Resolved,  That  it  be  recommended  to  James  iTeeson,  Esq.,  to^ 
postpone  the  execution  of  the  order  for  said  sale,  if,  in  his  judgment,, 
it  will  be  for  the  interest  of  the  state. 

And  then  the  board  adjourned. 

F.  H.  PEIRPOIISrT. 


SATURDAY,  May  25th,  1867. 
Present — Treasurer  and  auditor. 

Resolved,  That  Bradley  T.  Johnson  and  James  Neeson,  or  either 
of  them,  be  and  they  are  hereby  appointed  proxies  to  represent  the 
state's  interest  in  the  meeting  of  the  stockholders  of  the  Chesa- 
peake and  Ohio  canal  company. 

And  then  the  board  adjourned. 

J.  S.  CALVERT. 


60 


WEDi^ESDAY,  21  Aug.,  1867. 
Present — Treasurer  and  auditor. 

Eesolved,  That  it  is  inexpedient  at  the  present  time  to  offer  for 
sale  the  bonds  of  the  Chesapeake  and  Ohio  canal  company  held  by 
the  state,  and  that  James  i^eeson,  Esq.,  be  requested  to  act  accord- 
ingly. 

And  then  the  board  adjourned. 

J.  S.  CALVERT. 


THURSDAY,  August  22d,  1867. 
Present — Treasurer  and  auditor. 

An  account  of  Bradley  T.  Johnson  &  Co.,  amounting  to  §4,460  40, 
being  twenty  per  cent,  on  $22,302,  realized  from  the  tolls  and  reve- 
nues of  the  Chesapeake  and  Ohio  canal  company  and  paid  into  the 
treasury,  and  applied  to  the  liens  of  the  state  on  said  tolls  and  reve- 
nues, as  per  contract  between  said  Johnson  &  Co.  with  the  board  of 
public  works  of  Virginia,  authorized  by  joint  resolution  of  the 
general  assembly  passed  February,  1867,  was  submitted  to  the 
board  and  considered.  Whereupon,  it  was  ordered  that  the  said 
account  be  certified  to  the  auditor  of  public  accounts,  as  correct, 
for  payment. 

And  then  the  board  adjourned. 

J.  S.  CAL\^ERT. 


WEDNESDAY,  22  December,  1869. 
Present — Treasurer  and  auditor. 

Ordered,  That  the  secretary  of  the  board  be  directed  to  address 
:a  communication  to  Bradley  T.  Johnson,  Esq.,  asking  him  for  a  full 
report  of  his  transactions,  as  the  attorney  of  the  state,  in  prosecu- 
ting the  claims  against  the  Chesapeake  and  Ohio  canal  company. 

And  then  the  board  adjourned. 


61 


TUESDAY,  28th  December,  1869. 
Present — All  the  members. 

A  report  from  Bradley  T.  Johnson,. Esq.,  in  answer  to  the  request 
of  the  board  of  the  22d  inst.,  was  submitted  by  him  in  person  and 
read. 

It  was — 

Eesolved,  That  James  Neeson,  heretofore  acting  as  the  attorney 
of  Virginia  in  the  matter  of  the  prosecution  of  the  claim  of  the 
State  vs.  Selden,  Withers  &  Co.,  be  requested  to  report  in  writing 
at  a  meeting  of  the  board  of  public  works  to-morrow,  December 
29th,  1869,  at  11  o'clock,  in  the  treasurer's  office,  what  sum  of 
money  have  been  collected  by  him,  or  by  his  authority,  on  account 
of  said  claim,  and  what  disposition  has  been  made  of  the  same; 
and  if  any  moneys  have  been  collected  by  anyone  other  than  him- 
self, upon  what  terms  and  conditions  the  same  was  collected,  and 
what  disposition  has  been  made  of  it. 

And  then  the  board  adjourned. 

G.  C.  WALKER. 


FRIDAY,  29th  December,  1869. 

Present — All  the  members. 

The  report  called  for  from  Mr.  iTeeson  on  yesterday  was  sub- 
mitted to  the  board  and  read. 

After  consideration,  the  following  preamble  and  resolution  were 
adopted : 

Whereas  it  has  come  to  the  knowledge  of  the  board  of  public 
works,  that  the  sum  of  $21,000  has  come  into  the  hands  of  Bradley 
T.  Johnson,  which  sum  is  interest  on  claims  of  the  state  against  the 
estate  of  Selden,  Withers  &  Co.,  and  which  Mr.  James  I^eeson  only 
was  authorized  to  collect  by  reason  of  his  appointment,  dated  March 
20th,  1866;  it  is,  therefore,  • 

Ordered,  That  the  said  ITeeson  forthwith  recover  from  the  said 
Johnson  the  said  sum  of  $21,000,  and  pay  the  same  into  the  trea- 
sury of  Virginia  to  the  credit  of  this  board. 


62 

Eesolvcd,  That  Mr.  Bradley  T.  Johnson  be  directed  to  pay  into 
the  treasury  of  the  state  forthwith,  to  the  credit  of  this  board,  the 
sum  of  $37,435,  collected  by  him  as  agent  of  the  state  of  Virginia 
to  prosecute  claims  of  the  commonwealth  against  the  Chesapeake 
and  Ohio  canal  company,  excepting  only  his  commission  of  20  per 
cent,  on  the  said  amount. 

And  then  the  board  adjourned. 

G.  C.  WALKER. 


FRIDAY,  31  December,  1869. 

Present — All  the  members.  . 

Bradley  T.  Johnson,  Esq.,  in  person,  submitted  a  supplemental 
report  ot  his  proceedings,  in  writing,  which  was  read  by  him  to  the 
board  and  considered. 

Resolved,  That  any  moneys  received  by  the  second  auditor  from 
Bradley  T.  Johnson,  attorney  for  Virginia,  collected  by  him  from 
the  Chesapeake  and  Ohio  canal  company,  be  deposited  with  the 
treasurer  of  the  state  as  a  special  fund,  to  the  credit  of  the  board 
of  public  works,  and  subject  to  their  control. 

And  then  the  board  adjourned. 

G.  C.  WALKER. 


TUESDAY,  January  4th,  1870. 

« 

Present — All  the  members. 

Resolved,  That  our  counsel  in  the  case  of  the  commonwealth 
of  Virginia  against  the  Chesapeake  and  Ohio  canal  company  and 
others,  are  authorized  to  consent  to  the  application  of  the  payment 
of  ^58,435,  heretofore  made  to  the  state,  to  any  account  due  the 
commonwealth  by  said  company  as  may  be  adjudged  proper  by  the 
dbnvt  of  appeals  of  Maryland,  in  said  case. 

And  then  the  board  adjourned. 

G.  C.  WALKER. 


63 


THURSDAY,  May  19th,  1870. 

Present — All  the  members. 

Bradley  T.  Johnson,  Esq.,  appeared  before  the  board,  and  on  be- 
half of  himself  and  colleagues,  acting  as  attorneys  for  the  common- 
wealth prosecuting  the  claims  vs.  the  Chesapeake  and  Ohio  canal 
company,  submitted  a  report  of  their  proceedings  in  the  case,  and 
concluded  with  a  wish  that  the  state,  in  consideration  of  the  magni- 
tude of  the  interests  involved,  should  have  a  representative  in  the 
board  of  directors  in  said  company,  and  in  order  to  secure  it,  re- 
C[uesting  this  board  to  address  a  letter  to  the  board  of  public  works 
of  Maryland  upon  the  subject,  and  also  submitting  the  following 
papers  alluded  to  in  the  above  report,  viz:- 

1.  Message  of  Governor  Bowie  to  the  general  assembly  of  Mary- 
land ; 

2.  Thirty-ninth  Annual  Report  of  the  President  and  Directors  of 
the  Chesapeake  and  Ohio  Canal  Company  to  the  Stockholders,  8d 
June,  1867; 

3.  Pamphlet  entitled  "The  Duty  of  the  State  to  the  Preferred 
Bondholders,"  addressed  tcf  the  constitutional  convention: 

4.  Memorial  of  W.  W.  Corcoran  and  others  in  relation  to  the 
Chesapeake  and  Ohio  canal  company; 

.  4J.  Pamphlets  from  J.  H.  Gordon,  president,  15th  Feb'y,  '70,  to 
the  stockholders; 

5  and  6.  Printed  copy  of  the  record  and  argument  before  the 
court  of  appeals  of  Maryland — 
"Which  was  read. 

Resolved,  That  a  letter  be  addressed  to  the  board  of  public  works 
of  Maryland,  desiring  the  appointment  of  a  director  in  the  Chesa- 
peake and  Ohio  canal  company  to  protect  the  interests  of  Virginia, 
and  *  recommending  John  Poe,  Jr.,  as  a  suitable  person  for  the 
appointment. 

The  above  letter  having  been  written,  was  signed  by  all  the  mem- 
bers and  delivered  to  Bradley  T.  Johnson;  after  which, 
The  board  adjourned. 

G.  C.  WALKER. 


64 


TUESDAY,  June  7th,  1870. 

Present — All  the  members. 

A  communication  from  IT.  Poe,  Bradley  T.  Johnson  and  John 
P.  Poe,  dated  31st  May,  1870,  in  regard  to  their  proceedings  in  the 
court  of  appeals  of  Maryland  in  prosecution  of  the  claims  of  th& 
state  of  Virginia  against  the  Chesapeake  and  Ohio  canal  company^ 
was  submitted  to  the  board  and  read,  and  ordered  to  be  filed. 

And  then  the  board  adjourned. 

G.  C.  WALKER. 


MONDAY,  August  6th,  1871. 
Present — The  governor  and  the  auditor. 

General  Bradley  T.  Johnson  appeared  and  presented  the  follow- 
ing communication: 

7o  the  Board  of  Public  ^Vorks  of  the  Commomvealth  of  Virginia: 
Gentlemen  : 

We  have  the  honor  to  report  that  we  have  procured  the 
pa^mient  by  the  Chesapeake  and  Ohio  canal  company,  of  the  two 
hundred  thousand  dollars  of  bonds,  with  interest  on  the  same  from 
July  1st,  A.  D.  1852,  all  the  bonds  and  coupons  thereon  having 
been  paid,  except  to  Virginia,  from  and  including  January  1st,  1853. 

The  bonds  were  guaranteed  by  the  act  of  assembly  of  March 
15th,  1849,  and  the  payments  included  coupons  on  $200,000  of  the 
bonds,  to  and  including  January  1st,  1871,  and  on  §50,000,  to  and 
including  July  1,  1871.  Herewith  find  certificate  of  payment  from 
canal  compan}^ 

BRADLEY  T.  JOIIISrSON, 

For  himself  and  others. 


OFFICE  OF  THE  C.  &  0.  CAITAL  COMPANY, 
Frederick,  Jidi/  29/A,  1871. 

This  is  to  certify  that  this  company  have  taken  up  and  paid  all 
the  bonds  issued  by  the  Chesapeake  and  Ohio  canal  company, 
known  as  repair  bonds,  guaranteed  by  the  state  of  Virginia  under 
her  act  of  March  15th,  1849,  for  $200,000,  including  the  coupons, 
for  interest  due  on  the- same  from  and  including  the  first  of  Janu- 
ary, A.  D.  1853,  except  a  balance  due  the  state  of  Virginia  for 
money  due  her  on  account  of  money  paid  out  by  her  for  coupons 


65 


on  the  said  repair  bonds,  since  and  including  January,  1853.  The 
entire  indebtedness  of  the  canal  company  on  account  of  this  debt 
guaranteed  b}^  Virginia  is  now  paid  otF,  except  such  amount  as  may 
be  found  due  Virginia  on  a  settlement  with  her. 

JAS.  C.  CLARKE, 
Pr&side7it  C.  ^  0.  Canal  Company. 

K  C.  DICKERSOiT, 

Secretary  and  Treasurer. 

After  the  same  had  been  duly  considered,  the  following  pream- 
ble and  order  were  agreed  to: 

It  appearing  to  the  board,  from  the  record  and  decision  of  the 
court  of  appeals  of  the  state  of  Maryland,  in  the  case  of  the  com- 
monwealth of  Virginia  against  the  state  of  Maryland,  the  Chesa- 
peake and  Ohio  canal  company,  and  others,  and  from  the  certificate 
of  James  C.  Clarke,  president,  and  IT.  C.  Dickerson,  secretary 
and  treasurer  of  said  Chesapeake  and  Ohio  canal  company,  and 
from  the  report  of  Bradley  T.  Johnson,  for  himself  and  others, 
attorneys  for  this  board,  this  day  filed  in  this  office,  that  the  tolls 
and  revenues  of  the  said  Chesapeake  and  Ohio  canal  company  have 
been  appropriated  to  the  payment  of  the  preferred  liens  thereon; 

And  whereas  it  appears  by  said  certificate  that  the  bonds  guaran- 
teed by  the  state  of  Virginia  by  the  act  of  assembly  passed  March 
15th,  1849,  have  been  paid,  with  the  coupons  thereon  from  January 
1st,  1853,  inclusive,  whereby  the  commonwealth  of  Virginia  has 
been  relieved  from  debt  to  that  extent; 

And  it  appearing  to  this  board  that  the  commonwealth  of  Vir- 
ginia has  paid  on  account  of  said  bonds  thus  ^^aid  and  satisfied, 
the  sum  of  $102,120,  which,  with  interest,  is  a  just  claim  against 
the  said  Chesapeake  and  Ohio  canal  company ;  and  it  farther 
appearing  that  the  amount  from  paying  which  the  commonwealth 
of  Virginia  has  been  relieved  by  such  payment  aforesaid  of  said 
bonds  by  said  Chesapeake  and  Ohio  canal  company  is  the  sum  of 
$315,380,  and  the  said  Bradley  T.  Johnson  and  others,  attorneys 
for  this  board,  having  collected  and  paid  over  to  the  commonwealth 
of  Virginia  the  sum  of  $58,435  on  account  of  the  said  $102,120 
paid  by  the  commonwealth  of  Virginia,  leaving  a  balance  of 
$43,685  and  interest  still  due  the  said  commonwealth  of  Virginia 
on  account  thereof;  and  it  further  appearing  that  the  said  Bradley 
T.  Johnson  and  others,  attorneys  for  this  board,  w^ere  paid  twenty 
per  cent,  upon  said  $58,435,  in  accordance  with  the  contracts 
9 


66 

between  tlieni  and  tliis  board,  dated  respectively  February  27th, 
1867,  and  March  5tb,  1867— that  is  to  say  $11,687,  leaving  a  balance 
of  $63,100  due  them  on  account  of  services  rendered  in  relieving 
the  commonwealth  of  Virginia  troni  the  liability  aforesaid,  and  a 
further  balance  of  $8,737  to  be  paid  them  on  account  of  the  said 
$43,685,  when  collected  from  the  said  Chesapeake  and  Ohio  canal 
company,  making  in  all  $71,813  to  be  allowed  to  the  said  Bradley 
T.  Johnson  and  others,  attorneys  for  this  board,  according  to  the 
contracts  between  them  and  this  board  above  referred  to;  there- 
fore, be  it 

Ordered,  That  is'eilson  Foe,  John  F.  Foe  stnd  Bradley  T.  John- 
son, attorneys  for  this  board,  be  and  they  are  hereby  authorized 
and  directed  to  transfer  unto  themselves  such  portion  of  the  pre- 
ferred claim  of  the  commonwealth  of  Viro-inia  ag^ainst  the  said 
Chesapeake  and  Ohio  canal  company  as  will  represent  tlie  said  sum 
of  $71,813. 

And  it  is  further  ordered.  That  all  coupons  and  other  evicj^ences 
of  debt  now  held  in  possession  by  this  board  against  the  said 
Chesapeake  and  Ohio  canal  company  be  delivered  to  the  said  Keil- 
son  Foe,  John  F.  Foe  and  Bradley  T.  Johnson,  attorneys  for  this 
board,  for  collection:  provided  that  the  bonds  known  as  the  Scl- 
den,  "Withers  &  Co.  bonds  for  funded  coupons  for  $140,000  shall  be 
retained  by  this  board. 

G.  C.  WALKER. 


SATUFDAY,  22tii,  1872. 

Fresent — All  the  members. 

The  foUowins:  commmunication  was  laid  before  the  board  : 

7 0  the  Board  of  Public  Works  of  Virginia  : 

In  the  case  of  the  Board  of  Fublic  Works  vs.  Selden,  Withers  & 
Co.,  under  the  decree  of  the  circuit  court  of  Alexandria,  James 
^^"eeson  and  F.  S.  Beach  are  commissioners  to  make  sale,  among 
other  things,  of  bonds  of  the  Chesapeake  and  Ohio  canal  company 
(long  held  by  the  board).  These  bonds,  since  the  decree,  have  been 
under  our  control  and  custody,  but  for  safe-keeping  they  have  been 
left  in  the  safe  of  the  board  or  of  the  second  auditor.  We  now 
wish  these  bonds  for  sale  on  the  seventh  proximo  under  said  decree. 

(Signed)  JAMES  XEESOX, 

For  himself  and  F.  S.  Beach. 

27th  April,  1872. 


67 


It  appearing  that  a  portion  of  the  securities  referred  to  in  this 
communication  had,  by  order  of  the  board  dated  August  6th, 
1871  (see  ante  proceedings  of  August  6th,  1871,  pages  341,  342  and 
343),  been  delivered  to  Messrs.  I^Teilson  Poe,  John  P.  Poe  and 
Bradley  T.  Johnson,  attorneys  for  the  board,  for  collection,  it  was 

Ordered,  That  the  second  auditor  be  and  he  is  hereby  authorized 
and  requested  to  deliver  to  James  E"eeson,  Esq.,  the  bonds  in  his 
custody  known  as  the  Selden,  Withers  &  Co.  bonds  for  funded 
coupons,  amounting  to  the  sum  of  $140,000,  executed  by  the  Chesa- 
peake and  Ohio  canal  company,  payable  to  Selden,  Withers  &  Co., 
and  by  them  assigned  in  blank;  and  that  the  secretary  of  the  board 
deliver  to  said  Neeson  a  certified  copy  of  the  order  of  the  board  of 
August  6th,  1871. 

And  then  the  board  adjourned. 

(Signed)  G.  C.  WALKER. 


FRIDAY,  January  3d,  1873. 
-Present — The  treasurer  and  auditor. 

The  following  communications  were  laid  before  the  board : 

2o  the  honorable  the  Board  of  Public  Works  of  Virginia: 
Gentlemen  : 

The  undersigned,  counsel  of  the  commonwealth  to  prosecute 
her  claims  against  the  Chesapeake  and  Ohio  canal. company,  beg 
leave  to  report — 

That  since  our  last  settlement  with  this  board,  on  August  7th, 
1871,  we  have  received  from  the  canal  company  the  balance  of  the 
amount  due  on  the  "repair  bonds,"  viz.:  $43,685,  which  had  been 
allowed  at  that  settlement;  and  also  the  additional  sum  of  $5,602, 
not  included  in  the  statement  then  made,  but  subsequently  allowed 
by  the  court  upon  the  production  of  further  proof. 

The  board,  by  order  of  August  7th,  1871,  assigned  to  us  claims 
to  the  amount  of  $71,813,  all  of  which  have  since  been  received  by 
us  from  the  company,  as  follows: 

$43,685  due  on  last  settlement; 

5,602  subsequently  allowed  on  repair  bonds; 

Making       -       -    $49,287  paid  us  on"repair  bond  account; 
And  also,    -       -     22,526  paid  us  on|preferred  bond  account. 


$71,813 


68 


Since  the  settlement  of  August  7th,  1871,  we  have  recovered 
decrees  for  the  commonwealth  against  the  canal  company,  appro- 
priating its  revenues  to  the  payment  of  her  claims  upon  preferred 
bond  account,  and  also  allowing  to  her  a  farther  sum  on  repair 
bond  account,  to-wdt: 

Further  balance  on  repair  bond  account,  as  above  stated,  5,602 
Amount  due  on  account  preferred  bonds,  as  per  auditor's 

account  C,  finally  ratilied,     -  -  -  140,130 

Balance  allowed  by  court  of  appeals  on  certificate  of  in- 
debtedness,        -  -  -  -  6,726 


In  all,          -                -                -  -  1152,458 
Beside  these  sums,  we  hold  for  collection  cou- 
pon bonds,             -                -                -  13,500 
And  coupons  thereon  of  the  canal  company,  -  13,365 


We  have  received  the  above  sum  of  -  5,602 

Also,  on  account  of  preferred  bonds,  -  22,526 


26,865 


$179,323 
28,128 


Leaving  as  the  balance  now  due  Virginia,  -  -  $151,195 


Our  contract,  entered  into  in  February  and  March,  1867,  pro- 
vided that  our  contingent  compensation  should  be  twenty  per  cent, 
of  all  debts  due  to,  liabilities  guaranteed,  and  money  paid  by  the 
state  of  Virginia  to,  for  and  in  behalf  of  the  canal  company;  and 
this  compensation  is  by  the  contract  to  be  paid  to  us  in  bonds,  cou- 
pons, or  other  indebtedness  of  the  canal  company  in  the  hands  of 
and  belonging. to  the  state,  as  soon  as  said  canal,  or  its  tolls  and 
revenues  is  delivered  or  appropriated  to  the  preferred  creditors 
thereof  or  trustees  for  them. 

It  will  thus  be  perceived  that  the  contract  fixed  the  measure  of 
our  compensation,  designated  the  fund  out  of  which  it  was  to  be 
paid,  and  named  the  time  or  times  when  our  right  to  it  should 
accrue. 

The  total  amount  of  preferred  bonds  guaranteed  b}'- the 

state  is  -  -  -  -  300,000 

Coupons  thereon  from  July,  1852,  to  July,  1872,  -  369,000 


669,000 

Deduct  amount  heretofore  paid  on  certificate  for  $35,400,  28,674 


640,326- 


69 

.  Debts  due  to  the  state  by  the  canal  company  are: 

Bonds  held  by  her,  13,500  bonds, 

13,365  coupons. 
  26,865 


$667,191 


Twenty  per  cent,  of  this  ao'o:regate,  representing  the  debts  due  to 
and  liabilities  guaranteed  by  the  state  to,  for,  and  on  behalf  of  the 
canal  company,  amounts  to  the  sum  of  $133,438,  leaving  the  sum 
of  $17,757  due  to  Virginia.  To  this  sum,  payable  in  Virginia 
claims  against  the  company,  we  are  now^  by  our  contract  entitled. 

Our  contract  entitles  us  to  twenty  per  cent,  of  all  debts  guaran- 
teed by  the  state  for  the  company,  and  continues  until  all  these 
debts  are  finally  paid  off. 

It  is  manifest,  therefore,  that  if  our  settlement  w^ith  the  state 
under  our  contract  is  postponed  until  the  whole  of  the  preferred 
bonds,  together  with  the  coupons  yet  to  accrue  thereon,  shall  have 
matured  and  been  paid,  our  percentage  will  have  to  be  calculated 
upon  the  present  debt,  as  above  stated,  together  with  the  amount 
of  the  coupons  wdiicli  will  mature  from  the  present  time  up  to  "the 
time  when  the  whole  debt  shall  be  extinguished,  instead  of  being 
calculated  upon  the  debt  as  it  now  stands.  And,  therefore,  as  these 
coupons  in  the  fifteen  years  which  must  elapse  before  the  principal 
of  the  bonds  is  paid  will  be  $270,000  or  thereabouts,  in  addition  to 
the  amount  now  due,  our  compensation  will  be  $55,000  or  $60,000 
more  than  if  our  settlement  is  made  now,  thus  absorbing  all  the 
balance  now  due  to  the  state  by  the  canal  company,  and  already 
decreed  to  be  paid  to  her,  together  with  nearly  the  whole  of  the 
$64,000  thus  far  paid  by  us  to  the  board,  which  in  that  event  v/ill 
have  to  be  refunded  to  us. 

But  we  propose,  with  the  permission  of  the  board,  to  settle  our 
account  to  date;  to  take  an  assignment  from  the  board  of  the  claims 
of  the  state  against  the  canal  company  under  an  order  similar  to 
that  of  7th  August,  1871;  to  pay  you  at  once  in  cash  wdiatever  sum 
may  be  found  due  the  state,  and  to  release  the  fund  already  in  the 
hands  of  the  board  from  all  further  claims  on  it  under  our  contract. 

We  file  herewith  a  letter  from  his  excellency  Wm.  Pinckney 
Whyte,  governor  of  Maryland,  on  behalf  of  himself  and  the  board 
of  public  works  of  that  state,  which  will  show  you  that,  so  far  as 
human  foresight  can  ^anticipate,  Virginia  is  now  practically  released 
from  liability  on  account  of  her  guaranty  of  the  bonds  of  the  com- 
pany; and  we  also  file  certified  copies  of  the  auditor's  reports,  and 
the  orders  of  the  court  thereon,  showing  the  respective  amounts 
decreed  to  the  state  in  the  suit  against  the  canal  compan}-  which 
we  have  been  prosecuting  for  the  last  five  years. 

We  might  perhaps  content  ourselves  w^ith  this  statement  of  the 
results  which  have  been  accomplished,  and  of  the  sum  that  is  now" 
due  us  under  our  cantract;  but  in  view  of  the  importance  of  the 


70 


case,  we  trust  we  may  be  pardoned  for  a  somewhat  more  detailed 
account  of  our  connection  with  it. 

When  we  undertook  the  prosecution  of  these  claims  in  February, 
1867,  the  canal  company  had  been  insolvent  for  fifteen  years,  having 
since  1852  been  unable  to  pay  the  coupons  for  interest  on  its  repair 
bonds,  amounting  to  §200,000,  and  upon  its  preferred  bonds,  amount- 
ing to  $1,699,500.  In  consequence  of  this  long-continued  default, 
and  the  heavy  accumulation  of  arrears  of  interest,  the  bonds  them- 
selves had  become  almost  unmarketable,  and  were  at  that  time 
selling  at  from  10  to  15  cents  on  the  dollar  with  the  over-due 
coupons  on. 

Virginia  had  redeemed  her  guaranty  upon  the  $200,000  of  repair 
bonds,  and  the  $300,000  of  preferred  bonds,  from  1852  up  to  Janu- 
ary, 1861,  and  from  July,  1861,  up  to  January,  1865,  upon  all  the 
coupons  which  had  been  presented,  the  aggreocate  sums  paid  by  her 
amounting  to  about  $269,000.  Upon  the  evacuation  of  Richmond, 
in  April,  1865,  the  coupons  thus- redeemed  by  her,  and  which,  as 
thus  redeemed,  had  been  carefully  filed  away  as  evidence  of  her 
claims  against  the  canal  company,  were  destroyed,  lost,  or  possibly 
stolen;  and  many  of  the  records  which  showed  that  they  had  been 
paid  were  mutilated,  and  to  a  great  extent  valueless  as  evidence  to 
substantiate  her  claim. 

Her  condition  at  the  time  was,  therefore,  that  of  a  creditor  hold- 
ing a  large  claim  founded  upon  lost  coupons,  against  what  was  then 
believed  to  be  a  hopeless  insolvent  debtor. 

This  was  the  state  of  afiairs  when  the  contract  between  us  and  the 
commonwealth  was  entered  into. 

In  conformity  with  its  terms,  we  immediately  set  to  work  to  pro- 
cure the  passage  of  a  law  by  the  general  assembly  of  Maryland, 
transferring  the  administration  of  the  canal  company  from  the  hands 
of  the  stockholders  to  the  management  of  the  bondholders.  In 
this  we  were  successful,  and  late  in  March,  1867,  an  act  was  passed 
giving  to  the  trustees  of  the  bondholders  the  control  of  the  stock 
held  by  the  state  of  Maryland,  which,  being  five-eights  of  the  whole, 
practically  delivered  the  work  to  the  bondholders.  Had  this  been 
executed,  as  in  our  judgment  it  should  have  been,  by  the  then  ad- 
ministration of  Maryland,  our  work  would  have  been  completed, 
and  our  compensation,  fixed  by  the  contract,  would  have  been  im- 
mediately due,  and  payable  to  us  in  the  claims  of  this  state  against 
the  then  insolvent  canal  company. 

The  board  of  public  works  of  Maryland,  however,  declined  to 
execute  the  law,  on  the  ground,  as  stated  by  them,  that  it  was  un- 
constitutional; and  notwithstanding  repeated  meetings  with  them- 
and  several  arguments,  both  oral  and  written,  adhered  to  their  con- 
victions.   The  act  thus  became  a  dead  letter. 

The  constitutional  convention  of  Maryland  was  then  in  session, 
and  upon  the  refusal  of  the  board  of  public  works  to  execute  the 
act  of  1867,  we  applied  to  it  for  relief.    After  three  weeks  of  earnest 


71 


and  persistent  efforts,  we  not  only  failed  to  obtain  the  redress  we 
asked,  but  lost  by  repeal  the  benefit  of  the  act  of  1867. 

There  was  then  no  alternative  but  to  resort  to  the  courts.  The 
prospect  before  us  was  anything  but  encouraging,  and  our  efforts 
for  six  months  had  been  without  any  substantial  fruits,  except,  per- 
haps, to  call  public  attention  to  the  condition  of  the  canal  company 
and  the  necessity  for  some  reform  in  its  management.  In  Decem- 
ber, 1867,  after  first  endeavoring,  without  success,  to  make  some 
adjustment  with  the  company,  we  filed  a  bill  in  the  circuit  court  of 
Baltimore  city  against  the  Chesapeake  and  Ohio  canal  company, 
the  trustees  of  the  bondholders,  and  certain  other  parties,  for  the 
enforcement  of  the  claims  of  Virginia,  an  adjustment  of  the  pri- 
orities of  the  various  classes  of  the  bonded  creditors  of  the  canal 
compan}^  and  a  decree  appropriating  its  net  revenues  to  their  pay- 
ment in  the  order  of  their  priority. 

By  unusual  diligence  the  case  was  got  ready  fur  hearing  in  June^ 
1868,  but  a  plea  to  the  jurisdiction  was  interposed  by  the  company, 
upon  the  ground  that  the  state  of  Maryland  was  not  made  a  party 
to  the  case,  she  being  alleged  to  be  an  indispensable  party.  After 
argument  upon  this  point,  as  well  as  upon  the  merits  of  the  case, 
the  court  sustained  the  plea. 

Efforts  were  then  made  to  bring  the  state  of  Maryland  into  the 
case  as  a  party  defendant,  by  the  service  of  process  upon  her  gov- 
ernor, attorney-general,  and  board  of  public  works.  After  further 
argument,  in  March,  1869,  the  court  decided  that  the  case  could 
not  be  proceeded  with  until  the  state  of  Maryland  was  made  a 
party,  and  that  she  could  not  be  made  a  party  except  by  the  passage 
of  an  act  of  her  general  assembly  authorizing  her  to  be  sued. 
This  decision,  for  the  time,  put  a  stop  to  all  further  proceedings. 

At  the  January  session  of  1870,  application  was  made  for  the 
passage  of  such  an  act,  and  it  was  procured.  All  technical  difiiicul- 
ties  being  thus  removed,  a  pro  forma  decree  was  passed  in  March ^ 
1870,  by  the  lower  court,  dismissing  the  bill  which  we  had  filed. 
From  this  decree  we  appealed.  The  appeal  was  heard  and  deter- 
mined at  the  April  term,  1870,  of  the  court  of  appeals  of  Mary- 
land. The  opinion  and  decree  of  that  court  finally  established. 
First.  That  the  repair  bonds  were  the  first  lien  upon  the  net  tolls 
and  revenues  of  the  company;  and,  Secoyid.  That  after  the  payment 
of  the  repair  bonds,  principal  and  interest,  the  over-due  coupons  on 
the  preferred  bonds  were  entitled  to  be  paid  in  the  order  of  their 
seniority — the  coupons  redeemed  by  Virginia  being  entitled  to  be 
paid  pari  passu  with  those  held  by  other  parties,  notwithstanding  her 
default  in  meeting  her  guaranty  since  1861  as  to  some  of  the  bonds, 
and  since  1865  as  to  all  of  them.  [See  report  of  the  case  in  32 
Marjdand  Reports.] 

The  priority  of  the  repair  bonds  was  vigorously  denied  by  the 
state  of  Maryland  through  her  attorney-general,  and  by  the  repre- 
sentatives of  the  preferred  bondholders.  Had  their  views  prevailed, 
the  §108,000  of  coupons  on  these  bonds  which  Virginia  had  paid^ 


72 


and  the  $315,000  of  principal  and  unpaid  coupons  on  them,  for 
which  she  was  responsible  as  guarantor,  would  have  been  decided 
to  be  simple  contract  debts  of  the  canal  company,  without  liens 
upon  tolls  and  revenues;  and,  of  course,  Virginia's  claim  for  repay- 
ment by  the  company  of  the  $108,000  would  have  been  worthless, 
and  her  liability  for  the  $315,000  of  principal  and  unpaid  coupons 
would  have  remained  absolutely  without  any  security  whatsoever, 
and  without  any  right  of  resort  to  the  canal  company,  except  as  a 
common  creditor,  postponed  to  twenty  millions  of  preferred  debt 
due  by  an  insolvent  company.  In  other  words,  this  whole  repair 
debt,  amounting  to  $423,000,  would  have  been  totally  lost  to  her. 

After  this  decision  we  took  the  necessary  steps  to  secure  the  pay- 
ment of  the  repair  bonds  and  coupons  thereon  for  which  Virginia 
was  liable,  amounting  to  $315,000.  This  was  accomplished  by  the 
f  rst  of  July,  1871. 

We  then  went  to  work  to  prove  the  extent  and  details  of  Vir- 
ginia's claims  upon  the  company  for  coupons  on  its  bonds,  both 
repair  and  preferred,  redeemed  by  her  from  1852  to  1865  under  a 
commission  issued  by  the  courts  for  the  purpose.  We  procured 
such  evidence  as  the  case  allowed,  and  upon  it  obtained  payment  of 
the  coupons  on  the  repair  bonds  redeemed  by  Virginia,  amounting, 
as  has  been  stated,  to  the  sum  of  about  $108,000.  A  report  of  this 
has  already  been  submitted  to  you. 

The  whole  repair  bonds  and  coupons,  amounting  to  $423,000  or 
thereabouts,  having  thus  been  paid  in  full,  a  question  then  arose  as 
to  the  position  held  by  the  certificates  of  indebtedness  issued  by 
the  company  in  the  autumn  of  1853,  for  the  coupons  of  July  1, 
1852,  January  1,  1853,  July  1,  1853,  and  January  1,  1854,  which  it 
was  unable  to  pay,  but  funded  in  these  certificates. 

Virginia  held  a  certificate  for  $35,400,  upon  which  she  had  ob- 
tained payments  of  interest  amounting  in  the  aggregate  to  eighty- 
one  per  cent,  of  the  face  of  her  certificate. 

The  conflict  of  views  on  this  question  led  to  further  litigation  in 
the  lower  court  and  a  second  appeal  by  Virginia  to  the  court  of 
appeals  in  October,  1871.  We  will  file  with  you  a  copy  of  the 
record  of  this  case. 

In  the  argument  in  the  court  of  appeals,  in  December,  1871,  the 
attorney-general  of  Maryland,  and  the  solicitor  for  the  preferred 
creditors  who  had  not  funded  their  coupons  in  these  certificates, 
maintained  that  these  certificates  were  not  entitled  to  be  regarded  as 
preferred  claims  at  all,  but  were  properly  only  simply  unsecured 
debts  of  the  company,  and  that  the  eighty-one  per  cent,  which 
Virginia  had  received  upon  her  certificate  was  a  pa^'ment  made  in 
error,  with  which,  and  w^ith  interest  also  on  it,  she  w^as  chargeable, 
and  that  the  sums  so  paid  her,  and  interest  on  them,  ought  to  be 
applied  to  the  extinguishment  p?^o  tanto  of  the  coupons  held  by  her. 
Fortunately,  this  view,  which,  if  it  had  been  adopted  by  the  court, 
w^ould  have  annihilated  the  certificate  and  charged  Virginia  with 
upwards  of  35,000,  did  not  prevail,  and  under  the  decision  rendered 


73 


by  the  court  of  appeals  in  this  second  case,  she  was  declared  enti- 
tled to  the  nineteen  per  cent.,  amounting  to  $6,726,  upon  her  cer- 
tificate. (See  report  of  this'  case  in  vol.  35,  Maryland  Reports,  1.) 
Immediately  after  this  decision,  we  brought  to  a  hearing  in  the 
lower  court  the  further  question  raised  by  the  canal  company,  (see 
auditor's  account  A,)  that  Virginia  was  chargeable  with  interest 
upon  the  sura  of  |58,435,  paid  to  her  in  December,  1869,  from 
December  10,  1869,  to  July  1,  1871,  amounting  to  5,463  67,  and 
after  argument  before  the  court,  obtained  a  decree  that  the  charge 
w^as  improper.    (See  auditor's  account,  B.) 

All  disputed  questions  are  now^  settled,  and  under  the  final  deci- 
sion of  the  court  of  appeals,  a  decree  has  been  passed  appropriating 
the  net  revenues  of  the  canal  company  to  the  payment  ot  the  over- 
due coupons  on  the  preferred  bonds  in  the  order  of  their  seniority, 
those  held  by  Yirgimsi  pari  passu  with  the  rest.  During  this  cur- 
rent year,  the  outstanding  coupons  of  1852,  1853  and  1854  not 
funded,  the  balance  on  the  the  certificates  for  coupons  funded,  and 
four  coupons  (equal  to  f 204,000),  viz:  July  1,  1854,  January  1, 
1855,  July  1,  1855,  and  January  1,  1856,  upon  the  preferred  bonds, 
have  been  paid  by  the  company,  Virginia  receiving  hers  in  common 
with  other  holders,  notwithstanding  her  default  in  making  good 
her  guaranty  from  1861  to  the  present  time. 

In  this  connection  it  is  proper  to  state  that  a  serious  diflB.culty 
(and  to  our  mind  one  of  the  most  serious  difficulties  in  the  whole 
case)  was  the  point  made  in  the  argunient  before  the  court  of  ap- 
peals, that  Virginia  was  not  entitled  to  receive  any  part  of  the 
1269,000  wdiich  she  had  paid,  because  she  was  herself  in  default  as 
guarantor;  and  your  honorable,  board  will  observe  that  the  court 
required  her  to  wait  for  repayment  of  her  $108,000  of  repair  cou- 
pons until  the  repair  bonds  and  coupons  unpaid  by  her  on  them 
were  retired  by  the  company.  Had  this  same  ruling  been  applied 
to  her  preferred  coupons,  (as  was  vigorously  insisted  by  counsel  in 
the  discussion,)  the  fund  out  of  which  alone,  by  our  contract,  our 
contingent  compensation  was  to  be  paid,  (except  the  $13,500  of 
bonds  held  by  Virginia,)  would  have  been  entirely  divested,  and 
while  Virginia's  liability  would  have  been  relieved,  we  would  have 
been  left  without  any  fund  to  which  to  resort  for  our  fees. 

"It  will  thus  be  perceived  that  our  compensation  was,  therefore, 
contingent  upon  the  following  points: 

First.  Our  success  in  proving  the  payments  by  Virginia  of  the 
sums  claimed  by  her,  the  coupons  representing  such  payments  hav- 
ing been  destroyed,  lost  or  stolen,  and  the  liability  of  the  company 
to  Virginia  being  resisted  on  that  grounch 

Second,  Supposing  this  difficulty  of  fact  and  law  removed,  our 
success  in  resisting  the  defence,  that  until  her  default  was  made  al- 
together o^ood,  Virginia  could  not  rightfully  receive  any  portion  of 
the  $269,000  of  coupons  paid  by  her': 


10 


I 


74 


Third.  The  practical  question  of  the  value  of  the  claims  of  Vir- 
ginia against  the  canal  company,  (out  of  which  our  fees  were  to  he 
paid,)  after  those  claims  were  at  last  established. 

Fourth.  Success  in  asserting  the  priority  of  the  repair  bonds; 
and, 

Fifth.  Success  in  resisting  the  claim  of  the  state  of  Maryland, 
that  the  certificate  for  $35,400  was  annihilated,  and  that  Virginia 
was  chargeable  with  the  eighty-one  per  cent.,  and  interest  thereon, 
alleged  to  have  been  erroneously  paid  to  her,  and  amounting  to 
about  $35,000. 

Failure  upon  the  first  and  second  points  above  stated  would  have 
been  fatal  to  our  claim  for  compensation,  while  the  advantage  to- 
Virginia  in  other  respects  would  have  been  material.  Failure  upon 
the  third  point  would  have  left  in  our  hands  claims  against  the  canal 
company  of  no  substantial  value  to  us.  It  must  be  borne  in  mind 
that  all  the  expenses  of  the  litigation  of  five  years,  themselves  very 
heavy,  have  been  defrayed  by  us;  and  that,  in  view  of  the  loss  of 
the  coupons,  the  court  required  us  to  furnish  bonds  of  indemnity  to 
the  canal  company  belore  the  sums  allowed  to  the  state  in  the  audi- 
tor's accounts  were  permitted  to  be  paid  to  us;  which  bonds,  with 
approved  security,  we  have  ourselves  furnished  and  left  on  file  in 
the  case. 

As  has  been  stated,  all  litigated  questions  in  the  case  have  been 
disposed  of,  the  missing  proof  has  been  supplied,  bonds  of  indem- 
nity have  been  furnished  to  the  company,  the  repair  bonds,  princi- 
pal and  interest,  are  wholly  extinguished,  the  right  of  Virginia  to 
participate  in  the  regular  distribution  of  the  net  revenues  of  the 
company  until  the  coupons  on  preferred  bonds  redeemed  by  her  are 
refunded,  is  established  without  reference  to  her  own  default,  and 
nothing  remains  now  but  to  settle  and  adjust  finally  the  compensa- 
tion to  which  by  the  terms  of  our  contract  we  are  entitled. 

Public  attention  has  been  attracted  to  the  canal  company  and  the 
proper  administration  of  its  aftairs.  For  the  last  three  years  it  ha& 
been  prosperous;  its  revenues  have  increased;  its  expenses  have 
been  diminished;  its  capacity  to  pay  off  its  bonded  debt  has  been 
demonstrated;  its  credit  is  being  re-established;  and  its  bonds, 
which  in  1867  were  selling,  with  coupons  on,  at  from  10  to  15  cents 
on  the  dollar,  now  readily  bring,  with  coupons  on,  100.  Under 
such  a  condition  of  aftairs,  there  is  no  room  for  reasonable  doubt 
that  Virginia's  guarantj^  is  practically  relieved,  and  that  she  will 
never  again  be  called  on  to  make  provision  to  meet  it. 

At  the  rate  at  which  the  company  is  now  paying  oft'  the  coupons- 
on  its  preferred  bonds,  from  $250,000  to  $300,000  per  annum,  all  the 
arrears  of  coupons  will  be  retired  and  the  accruing  coupons  met 
within  the  next  eight  or  ten  years;  and  when  the  principal  of  the 
bonds  falls  due,  in  1883,  1884  and  1885,  the  canal  company  will  no 
doubt  be  in  a  condition  to  make  arrangements  for  their  payment  sat- 
isfactory to  all  parties,  and  the  bonds  themselves  will  be  considced 
a  most  excellent  investment. 


75 


• 


The  state  of  Maryland  is  interested  in  their  payment  at  the  ear- 
liest moment,  for  the  reason  that  after  they  are  provided  for,  the 
whole  surplus  of  the  net  revenues  of  the  company  will  belong  to  her 
as  second  mortgagor;  and  having,  therefore,  this  great  interest  at 
stake,  and  with  the  experience  of  the  prosperous  management  of  the^ 
last  three  years  before  her,  it  is  impossible  that  she  will  submit  to 
any  administration  of  the  atfairs  of  the  company,  her  appointees^ 
by  which  the  realization  of  her  claims  will  be  postponed  any  longer 
than  absolute  necessity  requires. ' 

Having  therefore  fully  completed  our  work,  and  complied  with 
all  our  obligations  under  our  contract  with  your  predecessors  in 
office,  we  respectfully  request  that  you  will  adjust  and  settle  our 
compensation  upon  the  basis  of  our  contract,  as  indicated  in  the  first 
part  of  this,  our  final  report. 

We  have  the  honor  to  subscribe  ourselves,' with  great  respect, 
Your  obedient  servants, 

(Signed)  BRADLEY  T.  JOHTTSOi^, 

N.  &  J.  P.  POE, 

Attorneys  for  the  Cornmomoealth  of  Virginia, 


Correspondence. 

BALTIMORE,  October  26th,  1872. 

To  the  Honorable  the  Board  of  Pablie  Works  of  Mari/land: 
Gentlemen: 

In  the  year  1867  we  were  employed  by  the  board' 
of  public  works  of  Virginia  to  take  such  steps  before  the  legisla- 
ture, the  state  convention,  or  in  the  courts,  as  in  our  opinion  might 
be  best  calculated  to  promote  and  protect  the  interests  of  that  state 
as  creditor  and  guarantor  of  the  Chesapeake  and  Ohio  canal  com- 
pany. 

From  time  to  time,  subsequently,  w^e  made  reports  to  our  clients 
of  what  was  being  done;  and  now,  our  work  being  wholly  com- 
pleted, we  are  about  to  submit  a  final  report.  In  that  report  we 
think  we  can  safely  say,  that  under  the  present  satisfactory  afiPairs 
of  the  company,  and  in  view  of  the  recent  payment  of  the  princi- 
pal and  interest  of  its  repair  bonds,  and  the  regular  payment  during 
the.  year  of  the  oldest  over-due  coupons  on  its  preferred  bonds,  the 
company  will  be  able,  year  by  year,  regularly  to  continue  to  pay  at 
least  four  or  five  of  the  over-due  coupons  on  its  preferred  bonds. 
Judging  from  the  receipts  and  expenditures  of  the  last  three  years, 
the  company  will  most  probably  be  able  to  pay  annually  six,  instead 
of  four  of  these  over-due  coupons;  but  we  would  prefer  to  make  no 
statement  to  the  board  of  public  works  of  Virginia  upon  the  sub- 
ject which  was  not  more  than  probable  of  being  realized. 


76 


Accordingly,  while  we  miglit  confidently  anticipate  that  under 
the  continuance  of  the  present  efficient  management  the  debt  ot 
the  company  will  be  paid  off  at  the  rate  of  |300,"000,  or  six  coupons, 
per  annum,  we  propose  to  promise  no  more  than  that  the  payment 
of  four  or  five  coupons  may,  Avith  reasonable  certainty,  be  looked 
for;  but,  before  submitting  our  final  report  to  the  board  of  public 
works  of  Virginia,  we  beg  leave  respectfully  to  request  that  you  will 
favor  us  with  some  expression  of  your  views  on  the  subject,  in  order 
that  we  may  be  better  able  to  know  how  far  our  opinion  of  the  pre- 
sent condition  and  future  prospects  of  the  canal  company  is  concur- 
red in  by  your  honorable  board. 

We  have  the  honor  to  be,  with  great  respect. 
Your  obedient  servants, 

(Signed)  K  &  J.  P.  POE, 

BRADLEY  T.  JOHNSOi^, 

Attorneys  for  the  Commonwealth  of  Virginia. 


STATE  OF  MARYLAND, 

Executive  Department, 
Annapolis,  November  ISth,  1872. 

'OentlExMen  : 

In  reply  to  your  favor  of  the  28th  instant,  I  am  directed  by 
my  colleagues  in  the  board  of  public  works  to  say,  that  while  they 
deem  it  best  not  to  make  answer  in  their  official  capacity  as  a  board, 
they  have  no  objection  as  individuals  and  officers  of  the  state  to  ex- 
press the  opinion,  that  at  least  four  of  the  over-due  coupons  on  the 
preferred  bonds  will  be  paid  annually  by  the  president  and  directors 
of  the  Chesapeake  and  Ohio  canal  company,  until  the  whole  over-due 
coupons  are  retired. 

The  present  management  is  likely  to  continue  the  same  jDrudent 
course  which  has  been  followed  since  June  last. 

We  limit  our  expectation  here  to  four  coupons  out  of  abundant 
.caution,  though  the  present  earnings  of  the  canal  encourage  the 
hope  that  the  payments  will  be  in  excess  of  that  number. 
Very  truly,  yours, 

(Signed)  WM.  PIOT^XEY  WHYTE. 

Messrs.  K  and  J.  P.  Poe,  Gen.  B.  T.  Johnson. 


77 

In  connection  with  the  said  communication  the  following  account 
was  presented : 

The  Commonwealth  of  Virginia, 

In  account  with 
K  &  J.  P.  PoE  AND  Bradley  T.  Johnson,  Attorneys : 

To  amount  allowed  by  order  of  board  of  public 

\vorks  of  August  7th,  187-       -       -  -.71,813 

By  amount  allowed  at  that  date  to  state  in  repair 

bonds,  and  since  paid,      -       -             -       -  43,685 

By  amount  in  repair  bonds  since  allowed    -       -  5,602 

By  amount  received  on  account  of  preferred  bonds,  22,526 


$71,813 


On  preferred  bond  account: 

To  debts  guaranteed  or  held  by  state — 

Preferred  bonds,   300,000 

Interest  from  July,  1852,  to  July,  1872,     -       -  369,000 


669,000 


By  amount  heretofore  paid  on  certificate  for 

$35,400,        -       -   28,674 


Total  debt  guaranteed  by  state,         -  640,326 
To  debts  due  to  the  state — 

Coupon  bonds  Chesapeake  and  Ohio  canal,  13,500 

Over-due  coupons        -       -       -       -       -  13,365 


26,865 
$667,191 

Twenty  per  cent,  on  this  due  us  on  our  contract,  being  total 
amount  debts  guaranteed  by  or  held  by  state,  $133,438  50. 

Total  amount  recovered  and  still  unsettled  : 

Further  balance  on  repair  bonds,         -  5,602  00 

Balance  allowed  by  court  of  appeals 

on  certificate  for  $35,400,          -       -  6,726  00 

Auditor's  account  '^C,"  finally  ratified 
in  state  of  Virginia  vs,  Chesapeake 

and  Ohio  Canal  Company,   et  cds.,  140,130  00 

 $152,458  00 


78 


To  amount  paid  on  order  of  August  7th.  1871 : 


Balance  on  repair  bonds,       -  -       5,602  00 

On  account  preferred  bonds  as  allowed 

in  auditor's  report  "  C,"    -       -       -     22,526  00 


28,128  00 


Balance  due  - 
Due  us,' 


-  151,195  00 

-  133,438  50 


Balance  due  Virginia, 


817,757  50 


And  the  same  having  been  duly  considered,  the  following  pream- 
ble and  orders  were  agreed  to : 

Whereas  it  appears  from  evidence  heretofore  filed  in  this  ofiice, 
and  more  particularly  specified  in  the  preamble  of  the  order  of  this 
board  dated  August  6th,  1871,  that  the  tolls  and  revenues  of  the 
Chesapeake  and  Ohio  canal  company  have  been  appropriated  and 
safely  secured  to  the  payment  of  such  of  the  liabilities  of  the  said 
company  as  the  commonwealth  of  Virginia  is  bound  for. now  as 
guarantor  to  the  amount  of  $300,000  principal,  with  interest  due 
thereon  from  July  1st,  1852,  amounting  to  $669,000;  on  which, 
how^ever,  the  sum  of  $28,674  had  been  paid,  leaving  a  balance  of 
1640,326  of  said  liability  guaranteed  by  the  commonwealth  of  Vir- 
ginia as  aforesaid ; 

And  whereas  it  appears  trom  the  letters  of  his  excellency  the 
governor  of  Maryland,  this  day  received  and  filed  in  this  ofiice,  that 
the  said  Chesapeake  and  Ohio  canal  company  are  now  paying  otf 
all  arrears  of  interest  on  said  liability,  and  is  in  such  condition  that 
the  whole  of  the  said  liability  for  the  which  the  commonwealth  of 
V^irginia  is  liable  as  guarantor  is  secured  to  be  liquidated  by  said 
company; 

And  whereas  E'eilson  Poe,  John  P.  Poe,  and  Bradley  T.  John- 
son, attorneys  for  this  board,  under  contracts  dated  respectively 
February  27th,  and  March  5th,  1867,  their  agreements  under  which 
they  have  substantially  fulfilled,  in  procuring,  as  above  recited,  the 
tolls  and  revenues  of  the  said  Chesapeake  and  Ohio  canal  company 
to  be  applied  and  secured  to  the  payment  of  the  liabilities  of  said 
company,  for  which  the  commonwealth  of  Virginia  is  liable  as 
guarantor,  have  now  jiroposed  to  pay  at  once  in  cash  into  the  trea- 
sury of  the  commonwealth,  the  sum  of  $17,757  50,  the  amount  due 
the  state,  as  appears  from  their  account  this  day  filed  in  this  ofiice, 


79 


which  said  account  has  been  examined  and  found  correct,  and 
further  propose  to  release  the  commonweaUh  from  all  claims  for 
further  compensation  for  their  services  under  the  said  contracts  of 
February  27th  and  March  5th,  1867;  therefore, 

Ordered,  That  the  account  of  ITeilson  Poe,  John  P.  Poe,"  and 
Bradley  T.  Johnson,  attorneys  for  this  board,  this  day  filed  in  this 
office,  is  hereby  approved;  and  the  secretary  is  dii'ected  to  procure 
and  file  a  release  in  full  on  the  part  of  the  said  Neilson  Poe,  John  P. 
Poe,  and  Bradley  T.  Johnson,  attorneys,  of  all  claim  against  the 
commonwealth  of  Virginia  for  any  further  compensation  for  their 
services  reiidered  in  accordance  with  the  terms  of  the  contracts 
aforesaid  of  February  27th  and  March  5th,  1867. 

Ordered,  That  the  second  auditor  be  and  he  is  hereby  authorized 
and  requested  to  issue  his  warrant  upon  the  treasury  for  the  receipt 
therein,  to  the  credit  of  the  sinking  fund,  from  l^eilson  Poe,  John 
P.  Poe,  and  Bradley  T.  Johnson,  attornej^s  for  the  board  of  public 
works,  of  the  sum  of  $17,757  50,  on  account  of  their  collections  of 
the  claims  of  the  commonwealth  against  the  Chesapeake  and  Ohio 
■canal  company. 

And  then  the  board  adjourned. 


WEDNESDAY  January  15th,  1873. 
Present — The  treasurer  and  the  auditor. 

In  accordance  with  the  order  of  the  board  of  January  3d,  1873, 
the  secretary  having  procured  a  deed  of  release  in  full  on  the  part 
of  Messrs.  Neilson  Poe,  John  P.  Poe,  and  Bradley  T.  Johnson, 
attorneys,  of  all  claims  against  the  commonwealth  of  Virginia  for 
any  further  compensation  for  their  services  rendered  in  accordance 
with  the  terms  of  the  contracts  between  them  and  the  board  of 
public  works,  dated  respectively  February  27th  and  March  5th, 
1867,  the  said  deed  of  release  was  laid  before  the  board,  examined, 
found  correct,  approved,  and  ordered  to  be  filed. 

And  then  the  board  adjourned. 


PAPERS  FILED  WITH  BOARD  OF  PUBLIC  WORKS., 


TEEASURER'S  OFFICE,  C.  &  0.  C.  CO., 

11th  May,  1855,  Washington,  D.  C. 

Second  Auditor  of  State  of  Virginia, 

.Eichmond,  Virginia: 

Dear  Sir: 

Herewith  I  send  you  certificate  ISTo.  154,  for  coupons 
funded  by  state  of  Virginia — 

Principal,         -  -  _  _  .    35,400  OO 

Interest  account,  .  _  _  .     1,056  14 

For  coupons  banded  me  by  Mr.  DeWitt. 

I  am,  yours  respectfully, 

JOK  GUEST, 
Ireasuaer  C.  ^  0.  C.  Co. 

P.  S.  Please  sign  and  return  witbin,  received. 


OFFICE  CHESAPEAKE  &  OHIO  CAN'AL  CO., 

Washington,  3Ia)/  7th,  1876. 

To  THE  Treasurer  of  the  State  of  Virginia, 

Bichmond,  Virginia  : 

Sir: 

A  late  law  of  the  state  of  Maryland  directs  that  all  the  arrears 
of  interest  due  on  the  bonds  of  this  company  issued  for  repairs  and 
the  completion  of  the  canal  up  to  and  including  the  coupons  due 
on  the  1st  of  January,  1867,  be  funded,  by  the  issue  of  certificates 
bearing  interest  at  the  rate  of  6  per  cent,  per  annum. 


81 


I  have  to  ask  the  favor  of  you  to  furnish  me,  at  your  earliest  con- 
venience, a  statement  of  the  claims  of  the  state  of  Virginia.  These 
consist,  I  helieve,  as  follows  : 

1st.  Bonds  issued  to  Selden,  Withers  &  Co.  for  coupons  paid 
by  them,  and  transferred  to  the  state  of  Virginia,  amounting  to 
$140,000,  with  interest  thereon.  The  coupons  for  which  these 
bonds  were  issued  remained  with  Selden,  Withers  &  Go.,  as  an 
evidence  of  the  character  of  the  debt,  to  be  surrendered  to  the 
company  when  the  bonds  were  satisfied,  and  should  have  been 
transferred  to  the  state  with  the  bonds.    Was  this  done? 

2d.  A  certificate  for  coupons  funded  to  the  1st  of  January,  1854, 
amounting  to  $35,400,  with  interest  due  to  the  1st  of  January,  1867, 
amounting  to  $21,731. 

3d.  Coupons  on  bonds  issued  for  repairs  of  the  canal,  amounting 
to  $200,000,  guaranteed  by  the  state  of  Virginia ;  the  amount  of 
interest  paid  thereon  by  the  state? 

4th.  Coupons  on  the  preferred  bonds  of  the  company,  amounting 
to  $300,000,  guaranteed  by  the  state;  the  amount  of  interest  paid 
thereon  by  the  state  ? 

Be  pleased,  also,  to  inform  me  if  the  executive  authorities  of  the 
state  competent  to  fund  these  securities  without  an  act  of  the  legis- 
lature ? 

Yours,  very  respectfully, 

W.  S.  EINGGOLD, 

Acting  Treasurer. 


OFFICE  CHESAPEAKE  Al^D  OHIO  CANAL  COMPANY, 

Washington,  3Iai/  18ih,  1867. 

Dear  Sir: 

I  have  just  received  yours  of  the  15th  instant.  The  certificate 
for  coupons  funded  included  the  coupons  due  and  payable  with  1st 
January,  1854. 

I  would  be  pleased  to  receive  your  statement,  if  practicable,  by 
the  25th  proximo,  with  a  view  to  the  annual  report  of  this  company 
to  be  made  on  the  3d  June  next. 

I  have  transmitted  by  the  present  mail  a  copy  of  the  law  recently 
passed  by  the  legislature  of  Maryland,  for  the  information  of  the 
board  of  public  works.  We  will  also  send  you  a  copy  of  the 
11 


82 


annual  report  as  soon  as  published.  In  the  meantincie,  I  beg  to 
suggest,  for  the  information  of  the  board,  that  the  company  have 
discharged  all  their  floating  debt  and  that  their  future  surplus  reve- 
nues will  be  applicable  to  the  payment  of  interest  on  their  bonds. 
It  is  confidently  believed  that  the  interest  due  on  the  1st  July  and 
1st  January  ensuing  will  be  paid. 

If  the  arrears  of  interest  to  the  1st  of  January  last  be  funded 
conformably  to  the  law",  of  which  no  action  of  the  board  will  be 
taken  before  June  next,  and  regular  payments  of  interest  can  be 
maintained,  it  w^ill  greatly  enhance  the  value  of  the  bonds.  This  I 
mention  confidentially,  in  view  of  the  sale  of  canal  bonds  advertised 
by  the  commonw^ealth  of  the  state  of  Virginia  at  Alexandria  on  the 
30th.  They  would  now  be  sold  at  a  great  sacrifice,  and  the  funding 
of  the  bonds  would  include  all  the  $140,000,  with  the  interest  due 
upon  them,  assigned  to  the  state  by  Selden,  Withers  &  Co.  Would 
it  not  be  well  for  the  present  to  withdraw  them  from  sale? 

Please  advise  me  if  the  coupons  for  which  these  bonds  w^ere  given 
are  in  the  possession  of  the  state  authorities.  It  will  be  requested 
that  they  be  delivered  to  the  company  when  the  bonds  are  adjusted. 

Yours  very  truly, 

W.  S.  RmGGOLD, 

Acting  Treasurer. 

T.  H.  DeWitt, 

Second  Auditor's  Office,  Bichmond,  Va. 


[Copy.] 

RICHMOND,  May  24th,  1867. 

W.  S.  Ringgold,  Esq.: 

Dear  Sir:  .  - 

Yours  of  7th  instant  to  the  treasurer  was  handed  to 
me  for  reply.  The  pressure  upon  this  office  and  the  time  required 
to  make  up  an  accurate  statement  of  the  claim  of  the  state  against 
the  Chesapeake  and  Ohio  canal  company,  have  delayed  a  compli- 
ance with  your  request  till  now. 

Enclosed  you  will  find  the  information  desired— showing  the. 
amount  due, principal  and  interest,  1st  January,  1867,  8572,389  30. 

The  coupons,  I  understand,  were  stolen  from  this  office,  but  the 


83 

evidence  of  payment  exist  on  the  books,  and  will  be  furnished  when 
required. 

Our  Mr.  DeWitt  tells  me  he  has  replied  to  your  other  enquiries. 

The  counsel  employed  by  the  authorities  here  wall  be  able,  I  pre- 
sume, to  give  you  such  explanations  as  you  may  require.  If  not, 
it  will  give  me  pleasure  to  furnish  any  that  may  be  at  my  command. 

Very  respectfully  yours, 

(Signed)  ASA  ROGERS. 


OFFICE  CHESAPEAKE  &  OHIO  CAKAL  CO., 

Washington,  Aug.  14:ih,  1867. 

Dear  Sir: 

I  have  received  yours  of  the  13th  instant,  enclosing  certificate 
Iso.  155,  for  $35,400,  with  the  payment  of  interest  endorsed  thereon 
to  the  1st  of  April,  1867,  amounting  to  $22,302;  for  which  sum  I 
herewith  transmit  to  you  my  check  l^o.  8,  on  the  Bank  of  Wash- 
ington, payable  to  3^our  order. 

I  regret  that  I  could  not  divide  the  check  for  you,  as  desired,  in 
different  amounts,  as  it  would  confuse  our  accounts.  Yoii  can, 
doubtless,  have  the  check  arranged  to  suit  you  at  bank. 

Please,  for  uniformity,  sign  the  receipt  under  the  printed  form. 
The  certificate  is  herewith  returned  to  you. 

Yours  very  truly, 

W.  S.  RINGGOLD, 
Acting  Treasurer. 

Hon.  Asa  Rogers, 

Second  Auditor  of  Virginia,  Richmond,  Va. 


RICHMOi^D,  October  17th,  1867. 

General  Asa  Rogers, 

Second  Auditor  Virginia  : 
Please  deliver  to  John  Johns,  Esq.,  the  bond  of  Chesapeake 
and  Ohio  canal  company  to  the  state  for  $35,600,  [$35,400  should 
read,]  given  in  1853  or  1854,  on  which  the  canal  company  made 
that  payment  in  August.    I  wish  to  use  it  in  my  settlement  with 


84 

the  company,  and  will  return  it  next  week  if  I  do  not  get  the  money 
for  it.    I  forgot  it  to-day. 

Your  obedient  servant, 

BRADLEY  T.  JOHNSOK 


Dear  Jno  : 

Get  the  bond  and  send  it  me  per  express,  to  the  c'are  A. 
Thos.  Brady,  Washington.    Write  by  mail  saying  you've  sent  it. 

Yours, 

B.  T.  J. 


Office  Board  Pub.  Works,  Oct.  17ih,  1868. 

B.  T.  JOHIS^SOi^, 
By  J.  JOimS,  Jr. 


DECEMBER  22,  1869. 

Bradley  T.  Johnson,  Esq.: 
Dear  Sir: 

I  am  instructed  by  the  board  public  works  respectfully 
to  request  of  you  a  report  of  your  transaction  as  attorney  for  the 
state  Virginia,  in  pursuance  of  a  resolution  of  the  general  assem- 
bly passed  February  26th,  1866,  to  authorize  the  board  public 
works  to  adopt  measures  for  realizing  the  preferred  liens  of  the 
state  upon  the  tolls  and  revenues  of  the  Chesapeake  and  Ohio  canal 
company ;  what  has  been  the  amount  realized  from  your  proceed- 
ings, the  amount  received,  and  the  amount  paid  and  to  be  paid  upon 
the  same,  and  the  present  condition  of  the  aftairs  of  the  company. 

I  am  trulv,  &c., 

T.  H.  DeWITT. 


85 

f 

RICHMOND,  YA., 
Wednesday  Moening,  Dec.  29th,  1869. 

,      To  the  'Board  of  Public  Works,  Virginia : 

The  resolution  of  the  board  of  public  works  of  the  28th 
instant,  relating  to  the  prosecution  of  the  claim  of  Virginia  against 
Selden,  Withers  &  Co.,  was  handed  to  me  late  ^^esterday  afternoon 
while  I  was  engaged  in  professional  business,  which  continued  till 
a  late  hour  after  night.  This  has  disabled  me  from  making  as  full 
a  report  as  I  could  desire,  but  I  hope  this  will  suffice  at  present. 

All  the  money  collected  by  me  in  the  prosecution  of  the  claim 
has  been  paid  into  the  state  treasury,  and  will  be  found,  according 
to  the  several  dates  and  several  sums  of  which  it  consisted,  on  the 
books  of  the  auditor  of  public  accounts,  under  the  head  of  Selden, 
Withers  &  Co.,  except  that  retained  on  account  of,  but  considerably 
less  than  the  compensation.  The  money  so  collected  was  the  pro- 
ceeds recovered  in  various  legal  proceedings  in  court,  some  of  which, 
are  concluded,  and  some  of  which  are  yet  pending  for  further  re- 
coveries anticipated,  and  to  some  extent,  certain  to  be  realized. 

I  am  not  aware  of  the  collection  of  any  other  money  on  this 
claim  by  my  authority  by  any  other  person;  though  I  was  very 
recently  informed  by  General  B.  T.  Johnson,  that  he  lately  received 
in'  Maryland,  under  some  arrangement  of  parties  to  a  suit  then 
pending,  about  or  some  $20,000  towards  satisfaction  of  a  large  sum, 
nearly  $140,000  of  coupons  from  the  bonds  of  the  Chesapeake  and 
Ohio  canal  company,  which  .coupons  I,  as  agent  of  Virginia,  ac- 
quired and  still  held  as  part  of  the  assets  of  Selden,  Withers  &  Co., 
on  account  of  the  state  claim  I  am  prosecuting.  I  never  authorized 
General  Johnson,  or  any  other  person,  to  receive  this  money,  or  any 
part  of  it,  and  did  not  suppose  it  could  be  reaUzed  until  by  legisla- 
tion the  state  of  Maryland  could  be  made  a  party  to  that  suit,  when 
a  decision  of  the  suit  was  anticipated,  and  when  I  expected  to 
recover  and  receive  what  should  be  adjudged  due  on  these  coupons. 
General  Johnson  being  much  interested  in  that  suit  as  involving  a 
claim  of  the  commonwealth  of  Virginia  under  his  control,  he  and  I 
conversed  on  the  subject  of  the  suit,  and  also  of  the  coupons.  It 
was  understood  by  us  that  upon  some  occasion,  which  was  antici- 
pated, but  not  defined  or  known,  I  should  take  the  coupons  to  Mary- 
land and  present  them  to  the  court  having  cognizance  of  said  suit, 


86 


or  some  officer  thereof,  and  have  them  audited.  After  this  General" 
Johnson,  either  by  letter  or  telegram,  most  earnestly  urged  me  to 
come  on  immediately  with  the  coupons,  or  send  them  to  him  by 
express.  Being  unable  to  go  instantly,  I  sent  them  to  him  by  ex- 
press, and  they  were  afterwards  returned  to  me.  When  I  next  saw 
General  Johnson,  he  told  me  the  coupons  answered  as  well  as  if  I 
had  been  there  with  them,  and  that  no  decision  could  be  expected 
for  some  time.  Those  coupons  have  not  in  time  or  circumstances^ 
except  as  stated,  been  out  of  my  possession  or  control,  and  no 
agreement  ever  made  by  General  Johnson  and  myself  that  he  should 
receive  the  money,  or  any  part  of  it,  due  or  recoverable  in  any  way. 
upon  these  coupons,  on  any  terms  whatever.  The  money  so  received 
by  General  Johnson  upon  the  coupons  has  not  come  to  my  hands, 
though  he  knows  that  I  expect  and  desire  him  to  deliver  it  to  me,, 
in  order  that  I  may  pay  it  into  the  treasury  of  the  state.  Under 
my  appointment  as  agent  by  Governor  Peirpoint,  I  am  fully  au- 
thorized to  collect  and  receive  said  money,  and  no  other  person  is 
authorized  to  receive  the  same  for  the  state,'  so  far  as  I  am  informed. 
Therefore,  I  claim  that  said  money  should  be  paid  to  me,  and  by 
me  into  the  treasury,  as  General  Johnson  fully  understands. 

Very  respectfully, 

JAMES  •N'EESON', 

Agent  of  Virginia. 


To  the  Board  of  Public  Works  of  Virginia : 
Gentlemen: 

I  have  the  honor  to  acknowledge  the  receipt,, 
through  the  hands  of  your  secretary,  of  copies  of  resolutions  passed 
this  day  by  the  board :  one  directing  me  forthwith  to  pay  into  the 
treasury  of  the  state,  to  the  credit  of  the  board,  thirty-seven  thou- 
sand four  hundred  and  thirty-five  dollars,  collected  by  me  as  agent 
of  the  state,  from  the  Chesapeake  and  Ohio  canal  company,  less  my 
commission  of  20  per  cent. ;  and  the  other  directing  Mr.  James 
Neeson  forthwith  to  receive  from  me  twenty-one  thousand  dollars, 
which  your  resolution  asserts  has  come  into  my  hands  as  interest 
on  claims  of  the  state  against  Selden,  Withers  &  Co.,  and  which 
Mr.  N"eeson  only  was  authorized  to  collect. 


87 


My  report  of  December  27th  to  the  board,  and  which  would  have 
been  made  sooner,  as  therein  explained,  except  for  my  necessary 
absence  in  Maryland  prosecuting  the  claims  of  the  state  in  this 
matter,  fully  explained  when,  how,  and  on  what  account  each  of 
these  amounts  was  collected  by  me.  It  gives  a  particular  statement 
of  each  payment,  the  account  on  which  it  was  received,  and  copies- 
of  the  agreements  between  creditors,  and  the  action  of  the  canal 
company  under  which  it  was  paid  to  me.  At  the  same  time  copies 
of  our  contracts  with  the  board,  and  a  special  po"wer  of  attorney 
from  the  board  to  me  to  collect  and  receipt  for  all  sums  due  to  the 
state  by  and  collected  from  the  canal  company,  was  furnished  the 
board.  At  the  same  time,  I  particularly  explained  to  the  board, 
that  as  to  the  payments,  making  in  the  aggregate  the  sum  of 
$37,435,  the  company  claims  to  have  discovered  errors  in  the  calcu- 
lations on  which  they  are  based — in  one  case  amounting  to  $1,054 — • 
and  that  they  had  notified  me  by  telegraph,  and  afterwards  per- 
sonally, through  their  president  and  chairman  of  their  committee 
on  accounts,  not  to  pay  over  that  money  until  these  errors  had  been 
corrected,  and  that  I  had  informed  them  that  I  should  retain  enough 
to  correct  all  errors.  My  report  further  showed,  that  there  were 
six  separate  settlements,  and  that  therefore  $6,000  was  riot  more 
than  sufficient  to  be  retained  for  correction  of  errors;  I,  therefore^ 
proposed  at  once  to  pay  over  the  balance,  less  our  commissions  on 
this  $6,000,  of  which  hereafter  I  proposed  to  present  a  particular 
account  to  the  board.  It  further  showed,  that  a  most  important 
part  of  our  arrangement  was  yet  to  be  carried  out  with  the  canal 
company,  and  that  I  should  insist  on  its  fulfillment  before  correcting 
any  errors.  Under  these  circumstances,  and  when  the  board  had 
full  knowledge  of  all  the  facts  attending  this  pledge  on  my  part 
professionally  to  the  canal  company,  I  respectfully  submit  that  I 
had  a  right  to  expect  that  the  board  would  at  least  have  consulted 
me  before  making  any  such  peremptory  order.  But  I  recognize 
the  extreme  delicacy  of  any  retention  of  public  funds  in  my  pos- 
session without  the  entire  concurrence  and  approbation  of  the 
agents  of  the  state.  I  cannot  allow  any  possible  ground  for  mis- 
understanding between  the  board  and  ourselves  to  arise  on  such  a 
question ;  and  I  am,  therefore,  ready  at  once  to  pay  into  the  treasury 
the  sum  of  $37,435— less  $7,487— $29,948,  being  the  entire  amount 
received  by  me  on  account  of  this  class  of  debts  due  the  state^ 
The  pledge  I  have  made  the  canal  company  I  consider  myself 


88 


bound  in  honor  to  perform,  and  shall  do  so  out  of  mj  personal  es- 
tate, relying  on  the  honor  of  the  board  to  keep  itself  in  a  condition 
to  indemnify  me  out  of  the  fund  without  requiring  any  application 
to  any  other  agency. 

With  regard  to  the  resolution  in  relation  to  the  receipt  by  Mr. 
i^eeson  from  me  of  §21,000,  I  have  to  make  these  remarks : 

The  preamble  asserts  that  "whereas  it  has  come  to  the  knowledge 
of  this  board  that  $21,000  have  come  into  the  hands  of  Bradley  T. 
Johnson,  on  account  of  the  interest  on  claims  of  the  state  against 
the  estate  of  Selden,  Withers  &  Co."  This  assertion  is  incorrect 
in  fact,  and  contains  a  reflection  on  me.  The  board  was  informed 
fully  and  particularly  by  me  of  the  collection — when,  where,  how, 
and  on  wdiat  account;  and,  therefore,  I  submit  your  resolution 
ought,  in  justice,  to  be  so  corrected  as  to  indicate  that  w^hereas  I 
had  reported  to  the  board  that  I  had  collected  $21,000  from  the 
canal  company,  &c.  This  is  a  matter  of  substance  to  me,  for  the 
proceedings  of  the  board  are  of  record,  and  I  am  sure  the  board 
never  intended  any  intimation  of  improper  conduct  on  ray  part  in 
this  collection. 

The  other  fact  miss-stated  is,  that  the  money  is  for  interest  on 
claims  of  the  state  against  Selden,  Withers  &  Co.;  ^vhereas  the  fact 
is,  that  it  is  for  interest  on  claims  held  by  the  board  of  public  works 
against  the  Chesapeake  and  Ohio  canal  company,  which  claims  were 
transferred  to  them  January  25  and  26,  1855,  and  are  now  held  by 
you,  as  stated  to  you  in  ray  report  and  as  the  public  records  show. 
I  respectfully  ask,  therefore,  that  these  two  mistakes  be  corrected, 
so  that  the  record  shall  state  accurately  the  facts. 

The  allegation  that  Mr.  ISTeeson  only  was  authorized  to  collect 
this  money,  or  that  he  has  anything  to  do  with  it,  is  an  entire  mis- 
take, as  I  shall  show. 

On  January  26th,  1855,  this  board  received  from  the  trustees  of 
Selden,  Withers  &  Co.  $208,000  of  bonds  and  certificates  of  the 
Chesapeake  and  Ohio  canal  company,  to  be  held  as  collateral  secu- 
rity for  the  debt  of  that  firm  to  the  state,  with  power  to  sell  the 
same,  collect,  or  fund  the  interest  due,  and  siie  the  canal  company 
for  the  bonds,  &c.  (Pub.  Doc.  of  Va.,  1855,  17,  p.  60,  61.)  Among 
these  $208,000  bonds  then  received,  were  certificates  for  funded 
coupons  numbered  493,  494,  525,  526,  and  527,  for  $140,000;  which 
certificates  were  then  delivered  to  this  board,  and  have  been  ever 


89 


since,  and  are  now,  in  tlie  entire  posession  of  the  board,  and  are  in 
the*  auditor's  safe  with  other  securities. 

"When,  therefore,  this  board  made  the  contract  with  my  associates 
and  myself  in  1867,  they  recited  the  fact  that  they  held"these  $208,- 
000  of  bonds  among  the  claims  of  the  state  for  preferred  liens  on 
the  canal  company,  and  they  formed  part  of  the  basis  on  which  the 
•contract  was  made.  Subsequently,  in  1867,  I  became  aware  that 
Mr.  l^eeson  was  the  attorney  of  the  state  in  winding  up  the  Seldeu, 
Withers  &  Co.  debt;  but  I  never  did  know  until  within  three  days 
that  he  had  received  his  appointment  by  virtue  of  a  joint  resolution 
of  the  general  assembly,  at  a  regular  salary  of  $3,000  and  expenses 
allowed. 

AVhen  I  became,  in  1867,  aware  of  his  connection  with  Selden, 
Withers  &  Co.,  it  was  my  duty  also  as  attorney  for  the  state,  as  Well 
as  my  professional  obligation  as  a  gentleman  and  a  lawyer,  to  keep 
him  advised  of  the  general  progress  of  my  prosecution,  so  that 
whatever  professional  rights  he  might  have  in  the  matter  should  be 
protected.  "Whatever  sums  we  received  on  account  of  the  $140,000 
certificate  would  necessarily  be  applied  to  the  credit  of  the  Selden- 
Withers  debt,  and  it  was  necessary  for  him  to  know  it. 
.  Had  I  known  he  received  a  regular  salary,  this  professional  obli- 
gation would  not  have  existed.  Finding  that  the  validity  of  these 
bonds,  I^os.  493,  494,  525,  526  and  527,  as  liens  was  desired,  in  our 
investigation  as  to  their  origin,  I  found,  from  Mr.  Ringgold,  the 
secretary  and  treasurer  of  the  company,  that  they  were  issued  for 
coupons  fanded,  which  coupons  were  at  the  time  sarrendered  to  the 
company,  and  for  the  main  part  cancelled.  Sometime  after  their 
delivery  thus,  it  was  considered  better  for  Selden,  Withers  &  Co.  to 
have  the  cancelled  coupons  in  their  possession,  as  proof  that  these 
certificates  were  for  funded  coupons.  The  cancelled  coupons  were, 
therefore,  delivered  by  the  canal  company  to  Selden,  Withers  &  Co., 
but  were  not  delivered  by  them  to  this  board  when  the  certifi- 
cates were,  bemg  coupons,  in  law  cancelled,  and  in  fact  many  of 
them,  as  I  have  seen,  are  cancelled  on  their  face.  Mr.  Einggold  told 
me  that  a  person  connected  with  the  estate  of  Withers  or  Selden, 
liad  brought  these  couj)ons  to  the  company  for  funding,  but  he  in- 
formed him  they  had  already  been  funded  and  were  worthless. 

I,  acting  in  the  same  spirit  of  professional  courtesy,  informed  Mr. 

iNeeson  of  these  facts,  and  was  very  desirous  to  have  him  get  them 

from  the  estate  of  Withers  as  valuable  evidence  to  support  the  lien, 
12 


90 


which  alone  made  the  certificates  valuable.  The  liens  of  these  cei- 
tificates  as  being  for  funded  coupons,  and  the  attendant  circtim- 
stances,  are  fully  set  forth  in  a  bill  fi.led  in  the  circuit  court  for 
Baltimore  city  in  1868  by  myself  and  associates,  in  the  name  of 
the  commonwealth  of  Virginia  against  the  canal  company  and  its 
creditors,  for  the  purpose  of  asserting  all  claims  for  the  state,  and 
for  those  particular  claims  for  those  particular  certificates,  by  name 
and  designation.  A  printed  copy  of  this  bill  was  furnished  by  me 
to  Mr.  I^eeson  at  that  time. 

It  is  clear,  then,  that  Mr.  JSTecson  knew  that  these  certificates 
were  issued  for  funded  coupons;  that  the  coupons  held  by  him  were 
these  identical  funded  coupons,  the  certificates  for  which  are  now  in 
the  possession  and  control  of  this  board,  and  that  these  coupons 
have  no  money  value  whatever;  they  would  not  sell  in  the  market 
for  waste  paper,  nor  could  Mr.  iTeeson  collect  the  value  of  a  postage 
stamp  on  them.  If  it  be  true  that  they  are  of  value,  it  would  fol- 
low that  the  state  could  recover  double  the  amount  due  it. 

I  am,  therefore,  utterly  surprised  at  the  strange  inaccuracy  of  his 
report  to  this  board  as  to  his  statement  of  facts  and  inferences  there- 
from. Upon  examining  the  resolutions  of  March  30,  3866,  under 
which  he  has  been  appointed  agent  of  the  state,  it  will  be  seen  that 
by  no  construction  of  it  could  he  ever  have  been  employed  to  col- 
lect these  certificates  from  this  board,  which  holds  them  in  trust  for 
the  state.  The  joint  resolution  authorizes  him  to  prosecute  the 
claim  of  the  state  of  Virginia  against  Selden,  Withers  &  Co.,  and 
the  trustee  or  trustee  of  either  of  said  firm,  or  any  other  person 
having  in  his  possession  property  conveyed  in  trust  for  payment  of 
said  debt.  This  board  holds  the  certificates  in  trust  for  payment  of 
the  debt,  and  the  legislature  never  authorized  the  employment  of 
an  agent  to  prosecute  this  board. 

The  $21,000  received  by  me  was  for  interest  on  those  §140,000  of 
certificates  from  January  1st,  1852,  to  July  1st,  1854,  as  shown  by 
my  report  to  this  board.  It  is  not  interest  on  the  coupons  held  by 
Mr.  Neeson,  who  has  not  $140,000  of  coupons  in  his  possession,  but 
is  interest  on  certificates  'No.  493,  494,  525,  526,  and  527,  for  funded 
coupons  now  held  by  this  board.  If  Mr.  Neeson's  coupons  are  a 
portion  of  those  funded  by  the  certificates,  they  are  worthless.  If 
they  have  not  been  funded,  then  this  payment  has  nothing  to  do- 
with  them. 


91 


I  procured  on  one  occasion  the  coupons  from  Mr.  Neeson,  to  use 
as  evidence  in  the  equity  suit  in  Baltimore  to  establish  the  lien  of 
these  certificates,  just  as  I  would  have  summoned  him  as  a  witness^ 
but  never  dreamed  of  any  control  he  had  over  the  certificates  them- 
selves. On  examination  of  the  coupons,  it  was  considered  better 
not  to  exhibit  them  as  evidence,  and  they  were  at  once  returned  to 
Mr.  ITeeson,  not  a  soul  having  seen  them  than  the  attorneys  of  the 
state.  We  filed  our  bill  to  collect  them ;  we  gave  Mr.  ISTeeson  a 
copy  of  the  bill,  and  it  was  impossible  for  him  to  help  being  fully 
informed  as  to  our  proceedings  in  the  matter.  Our  course  towards- 
him  has  been  dictated  by  a  scrupulous  regard  for  all  his  professional 
rights,  whatever  they  might  be,  for  we  never  knew  until  to-day  that 
he  had  a  regular  salary;  nor  did  the  present  board  have  knowledge, 
I  understand,  until  very  recently,  of  the  amount  of  that  salary,  no 
record  of  Mr.  IsTeeson's  appointment  and  powers  having  been  made 
among  the  executive  proceedings.  "We  supposed  he  might  have 
some  contingent  fee,  as  we  had,  and  therefore  advised  him  of  our 
progress.  Even  if  Mr.  Neeson's  power  included  the  authority  to 
collect  this  ^140,000  of  certificates  from  the  canal  company,  it  is 
clear  that  this  board  subsequently  conferred  the  same  authority  in 
us,  which  we  have  in  part  successfully  secured.  We,  therefore,  on 
considering  our  contracts  and  powers  from  the  board,  and  Mr.  J^^ee- 
son's  powers  under  his  appointment  from  the  governor,  are  advised 
by  counsel,  that  under  the  express  letter  and  spirit  of  our  arrange- 
ment, the  entire  Chesapeake  and  Ohio  claim  held  by  this  board  is 
included  in  our  contract;  that  Mr.  I^eeson  has  no  relation  to  or  in- 
terest in  it  whatever;  and,  therefore,  I  respectfully  decline  to  recog- 
nize him  in  any  way  in  this  matter. 

This  board  is  our  principal.  With  it  our  engagements  are  made, 
and  from  it  our  powers  are  obtained;  and  I  propose,  therefore,  to 
pay  over  to  them  the  sum  of  $21,000,  less  our  commission  of  20  per 
cent. 

If,  after  this  full  explanation,  the  board  still  entertains  any  doubt- 
on  this  point,  I  will  give  any  security,  in  any  amount,  for  the  com- 
mission retained,  and  will  submit  the  question,  as  to  whether  we  are 
entitled  to  retain  this  commission  on  this  $21,000  collected,  to  any 
member  of  the  Eichmond  bar,  selected  by  yourselves  and  approved 
by  my  counsel.  The  certificates  would  have  been  sold  in  1867  for 
from  $22,000  to  $28,000  but  for  my  personal  and  urgent  solicitations 
to  the  board  of  public  works,  and  assurance  that  our  labors  would 


92 


certainly  impart  great  value  to  them.  I  have  collected  on  them 
121,000,  leaving  $250,000  still  due;  and  I  hope  this  board  will  re- 
tain the  entire  control  of  them,  either  by  a  sale  and  purchase  by 
them,  or  otherwise,  as  we  shall  hereafter  collect  more  of  the  amount 
due. 

Mr.  Neeson's  coupons  had  better  be  left  to  him  for  collection, 
if  he  thinks  they  are  of  any  value. 

I  desire  to  direct  the  attention  of  the  board  particularly  to  the 
terms  on  which  the  sum  due  for  interest  paid  on  the  repair  bonds 
for  1853  and  1854,  and  on  the  preferred  bonds  for  1854,  as  particu- 
larly described  in  my  receipt  to  the  canal  company,  a  copy  of  which 
is  appended  to  my  report  as  part  of  it,  have  been  received  by  me. 
They  were  received  on  the  distinct  understanding,  that  by  receiv- 
ing these  payments  in  cash,  w^e  agreed  to  remit  all  claims  for  in- 
terest due  on  them,  putting  us  on  the  same  footing  as  other  creditors 
who  were  to  be  paid  coupons  due  as  of  that  date. 

These  sums,  therefore,  must  be  received  by  the  board  with  the 
distinct  understanding  that  such  receipt  ratifies  the  arrangement 
thus  made. 

When  the  board  made  the  arrangement  with  us  in  1867,  the  bonds 
of  the  canal  company  were  selling  at  from  15  to  20  cents,  with  16 
years  coupons  attached,  or  at  the  rate  of  from  7J  to  10  cents  for  the 
coupons  themselves. 

The  claim  of  the  state,  therefore,  for  lost  coupons,  amounting 
to  $269,000,  could  hardly  have  brought  more  than  five  cents, 
$13,450. 

The  certificates  would  have  sold  for,  say  $25,000,  and  the  whole 
saleable  claim  of  the  state  would  not  have  produced  more  than 
$38,450.  We  have  collected  the  net  sum  of  $64,000,  after  retain- 
ing our  commission,  and  have  procured  the  allowance  of  our  claim 
to  the  amount  of  $350,000,  besides  $250,000  still  due  on  the  certifi- 
cates. We  hope  in  the  future  to  realize  still  larger  results  for  the 
board. 

Yours, 

BHADLEY  T.  JOH^SOX. 

December  29tii,  1869. 


93 


AUGUST  6th,  1871. 

And  it  is  further  ordered,  That  all  coupons  and  other  evidences 
of  debt  now  held  in  possession  by  this  board  against  the  said  Chesa- 
peake and  Ohio  Canal  company  be  delivered  to  the  said  ITeilson 
Poe,  John  P.  Poe  and  Bradley  T.  Johnson,  attorneys  for  this  board, 
for  collection:  provided  that  the  bonds  known  as  the  Selden, 
Withers  &  Co.  bonds  for  fanded  coupons  for  $140,000  shall  be 
retained  by  this  board. 

In  pursuance  of  the  above  order  from  the  board  of  public  works, 
I  have  received  from  the  second  auditor  the  following  coupons  and 
other  evidences  of  debt:  41  coupons  of  $30  each,  12  coupons  of  $15 
each,  27  coupon  bonds  of  $500  each,  accrued  from  assets  of  Selden, 
Withers  &  Co. ;  also  a  letter  from  J.  S.  Guest,  treasurer  of  the 
Chesapeake  and  Ohio  canal  company,  dated  10th  May,  1855, 
acknowledging  the  receipt  from  the  board  of  public  works  coupons 
from  repair  bonds  to  the  amount  of  $17,820. 

(Sign ed)  BRADLEY  T.  JOHI^SOiT, 

For  s.elf  and  Poe  ^  Poe. 


[Copy.] 

DECEMBER  31,  1869. 

Received  of  Bradley  T.  Johnson,  attorney  for  the  state,  the  sum 
of  thirty-nine  thousand  and  nine  hundred  and  forty-eight  dollars 
[should  be  $29,000],  being  net  amount  (less  twenty  per  cent,  com- 
mission) of  thirty-seven  thousand  four  hundred  and  thirty-five  dol- 
lars collected  by  him  from  Chesapeake  and  Ohio  canal  company  on 
account  of  coupons  paid  by  the  state  in  1853  and  1854  on  bonds  of 
the  Chesapeake  and  Ohio  canal  company  guaranteed  by  the  state, 
and  on  a  certificate  issued  to  the  state  by  that  company  for  $35,400 
funded  coupons  up  to  October  1st,  1869. 

S.  A.  PORTER, 

Second  Auditor, 


94 


[Copy.] 

Eeceived  of  Bradley  T.  Johnson,  attorney  for  the  state,  the  sum 
of  sixteen  thousand  eight  hundred  dollars,  being  net  amount  of 
twenty-one  thousand  dollars,  less  twenty-per  cent,  commission,  col- 
lected by  him  on  certificate  for  funded  coupons  issued  by  the  Chesa- 
peake and  Ohio  canal  company  to  Selden,  Withers  &  Co.,  and  by 
them  transferred  to  the  board  of  public  works,  and  now  held  by 
said  board,  said  certificates  being  numbered  J^os.  493,  494,  525,  526, 
527,  said  amount  being  for  interest  on  said  certificate  from  January 
1,  1852,  to  July  1,  1854,  inclusive. 

S.  A.  POETER, 

Second  Auditor. 


RICHMOi^D,  May,  19th,  1873. 

Eeceived  of  Col.  W.  D.  Coleman,  secretary  board  of  public  works, 
coupons  on  repair  bonds  of  Chesapeake  and  Ohio  canal  company 
for  collection  : 

Ko.  71,  July,  1859,  $15. 

202,  30-. 

203,  30. 

204,  30. 

(Signed)  BRADLEY  T.  JOHNSON. 


1 1 


RESPONSE  OF  JAMES  NEESON. 

•   

Hon.  Marshall  Hanger, 

Speaker  of  the  House  of  Delegates: 

Sir: 

I  have  the  honor  to  acknowledge  the  receipt  of  a  copy  of 
"resolutions  in  regard  to  certain  settlements  between  General  B.  T. 
Johnson  and  James  I^^eeson  and  the  board  of  public  works,  as  to 
certain  claims  of  the  state  against  the  Chesapeake  and  .Ohio  canal 
company,"  passed  the  30th  day  of  January,  1877. 

The  second  of  these  resolutions  is  in  the  following  words,  to-wit : 
"That  the  Hon.  James  iTeeson  be,  and  he  is  hereby  respectfully 
requested  to  furnish  this  House  a  statement  showing  the  amount 
and  character  of  the  claims  against  the  firm  of  Selden,  Withers 
&  Company  which  were  placed  in  bis  hands  for  collection  as  attor- 
ney for  the  state  of  Virginia;  the  amount  collected  by  him  in 
money;  the  amount  collected  by  him  in  other  assets;  the  character 
of  those  assets,  and  what  disposition  was  made  of  said  money  and 
other  assets. " 

In  compliance  with  this  request  I  present  through  you  to  the 
House  the  following  response  : 

Prior  to  the  late  war  some  years,  the  board  of  public  works  of 
Virginia  entrusted  to  the  firm  of  Selden,  Withers  &  Company,  as 
agents,  a  large  amount  of  the  bonds  of  the  commonwealth  for  sale 
or  negotiation;  in  respect  to  which,  or  a  large  part  of  which,  the 
firm  proved  delinquent  and  failed  to  satisfy  the  board  therefor.  The 
firm  became  insolvent  and  failed,  and  made  an  assignment  of  its 
.assets  to  trustees  for  the  benefit  of  its  creditors,  including  the  board 
of  public  w^orks  or  Virginia;  but  provided  that  the  latter  should 
only  be  paid  out  of  any  surplus  after  paying  other  creditors.  John 
Withers,  one  of  the  firm  of  Selden,  Withers  &  Company,  conveyed 
certain  of  his  individual  property,  situate  in  Missouri  and  in  Vir- 


96 


ginia,  to  trustees  to  secure  to  the  board  of  public  works  or  Vir- 
ginia any  deficit  which  might  remain  due  from  Selden,  Withers 
&  Company  of  such  surplus  under  the  aforesaid  assignment  of 
assets.  The  board  of  public  works  also  held  as  collateral  security, 
certain  bonds  of  the  Chesapeake  and  Ohio  canal  company,  to-wit: 
five  "special  bonds''  for  $140,000,  and  a  parcel  known  as  "preferred 
bonds"  for  $13,500. 

Such  was  the  character  of  the  claim  of  the  board  of  public 
works  against  Selden,  Withers  &  Company.  In  a  suit  in  tlfe  circuit 
court  of  Alexandria  for  the  enforcement  of  this  claim,  the  amount 
was  ascertained  to  be  $513,615  29,  with  interest  on  $382,298  15 
thereof  from  the  1st  day  of  April,  1860. 

In  the  prosecution  of  this  claim,  I  have  proceeded  in  many  direc- 
tions, upon  persons  and  property  whenever  and  wheresoever  dis- 
covered, in  every  available  method,  and  have  reported,  from  time 
to' time,  to  the  governor  or  board  of  public  works,  such  proceed- 
ings, and  the  results  thereof  In  performance  of  this  duty,  it  be- 
came necessary,  among  other  things,  to  have  accounts  and  settle- 
ments with  the  trustees  under  the  assignment  of  Selden,  Withers  & 
Co.,  to  cause  sales  to  be  made  of  the  individual  property  of  John 
Withers  in  Virginia  and  in  Missouri,  and  of  the  bonds  above  de- 
scribed. Sales  of  the  said  bonds  and  of  said  property  in  Virginia 
were  decreed  by  the  circuit  court  of  Alexandria  in  the  before-men- 
tioned suit. 

The  amount  collected  by  me  in  money  will  now  be  stated.  Prior 
to  a-nd  down  to  the  28th  day  of  April,  1874,  as  my  reports  show,  I 
had  collected  the  sum  of  $104,615  28;  of  which  I  had  paid  into  the 
treasury  of  the  commonwealth  $95,732  46,  and  disbursed  for  ex- 
penses $1,076  14,  making  a  total  of  $96,808  60.  The  remainder, 
$7,809  60,  was  retained  on  compensation,  there  being  then  yet  due 
me  the  sura  of  $1,193  32.  The  report  of  a  joint  committee  of  the 
Senate  and  House,  upon  investigation,  shows  and  approves  the 
foregoing  statement  of  receipts  and  payments  and  balances  due  me; 
which  report  was  agreed  to  by  both  Plouses.  The  report  and  the 
action  of  the  House  of  Delegates  thereon,  of  the  date  of  28th  April, 
1874,  appear  in  the  Journal  of  the  session,  1874,  on  pages  516-17. 
Since  that  date  and  report  I  have  collected  the  sum  of  $2,918  63, 
and  paid  $1,600  into  the  treasury.  Further  collections  will  be  made, 
but  the  amount  is  scarcely  susceptible  of  estimate,  being  dependent 


97 

on  litigation  and  contingencies  to  a  considerable  extent.  It  is  not 
likely  to  be  large. 

"  The  amount  collected  by  me  in  otber  assets"  than  money,  and 
what  disposition  thereof  has  been  made,  I  am  requested  to  state. 
Of  such  other  assets,  there  were  two  items,  viz  :  coupons  of  the 
Chesapeake  and  Ohio  canal  company  bonds  to  the  amount  of 
$140,000,  and  a  package  (or  two)  of  the  notes  of  the  insolvent  Bank 
of  the  Commonwealth,  to  the  amount  of  about  f  10, 000. 

After  the  decree  of  the  circuit  court  of  Alexandria  before  men- 
tioned, for  the  sale  of  the  Chesapeake  and  Ohio  canal  company 
bonds  for  $140,000,  and  before  sale,  information  was  received  in- 
ducing the  belief  that  said  bonds  had  been  issued  for  coupons  of  an 
equivalent  amount  belonging  to  Selden,  Withers  &  Co.,  and  that 
they  should  go  with  said  bonds,  and  be  available  to  the  board  of 
public  works. 

After  much  time  and  enquiry,  I  found  these  coupons  (between 
$139,000  and  $140,000)  at  Staunton,  Ya.,  in  possession  of  one  of 
the  trustees  in  the  assignment  of  Selden,  "Withers  &  Co.,  and  I  ob- 
tained them  from  him,  giving  therefor  m}^  receipt  as  agent  of  Vir- 
ginia. I  took  possession  of  them  for  the  benefit  of  the  board  of 
public  works,  (and  so  informed  that  body,)  towards  paying  the  debt 
of  Selden,  Withers  &  Co.  It  was  my  purpose  to  have  these  cou- 
pons presented  and  recognized  for  payment  in  a  suit  in  Maryland, 
wherein  General  B.  T.  Johnson  represented  Virginia.  Before 
this  was  done.  General  Johnson,  then  in  Maryland,  requested  me 
to  come  on  with  the  coupons,  or  to  send  them  to  him.  At  once  I 
sent  them  to  him  by  express.  Soon  afterwards  he  returned  them 
to  me,  informing  me  that  they  had  been  duly  proved  and  were  not 
longer  use  for  the  court  or  its  officer.  These  coupons  are  still 
in  my  possession.  The  money  realized  on  these  coupons  for 
$140,000  never  came  to  my  hands.  When  part  had  been  realized, 
to  wit:  $21,000,  and  had  come  into  the  hands  of  General  Johnson 
without  my  knowledge  or  consent,  I  demanded  it  of  him,  that  I 
might  pay  it  into  the  treasury  of  the  commonwealth,  but  he  re- 
fused; upon  which  I  informed  the  board  of  public  works  of  the 
fact  of  the  refusal.  The  board  thereupon,  by  order  of  29th  Decem- 
ber, 1869,  directed  me  to  receive  the  money  and  pay  it  into  the 
treasury.  Afterwards,  as  I  was  informed,  the  board,  upon  the  ap- 
plication of  General  Johnson,  recognized  his  claim  of  right  to 
13 


98 

receive  the  proceeds  of  the  said  coupons;  and  I  am  further  in-  \ 
formed  that  he  accounted  therefor  to  the  board  of  public  works. 

The  bank-notes  above  mentioned,  for  about  $10,000,  came  to  mj 
hands  from  one  of  the  said  trustees  of  Selden,  Withers  &  Co.  under 
the  assignment,  as  collateral  and  part  paj^ment  of  a  sum  decreed 
against  him  as  trustee,  on  which  sum  he  will  be  entitled  to  a  credit  for 
the  amount  which  may  be  realized  from  the  notes.  A  suit  is  pend- 
ing in  the  chancery  court  of  the  city  of  Richmond,  by  the  style  of 
Scott  and  others  against  The  Bank  of  the  Commonwealth  and 
others,  for  the  collection  of  these  and  other  like  notes  by  enforce- 
ment of  the  personal  liability  of  the  stockholders  according  to  the 
law  under  which  the  notes  were  issued  for  circulation.  The  notes 
were  received  from  Mr.  William  Bayne,  and  hence  his  name  is 
used  in  the  suit.  Of  my  possession  of  these  notes  and  everything 
relating  to  them,  my  report  to  Gov.  G.  C.  Walker  of  February  1, 
1870,  fully  advised  the  board  of  public  works. 

I  am,  very  respectfully,  your  obedient  servant, 

JAMES  NEESOK 

February  15th,  1877. 


